Exhibit 10.140a
PERFORMANCE-
BASED
RESTRICTED
STOCK GRANT
Terms
TIFFANY & CO.
a Delaware Corporation
(the "Company")
TERMS OF PERFORMANCE-BASED RESTRICTED STOCK GRANT
(Non-Transferable)
under the
1998 EMPLOYEE INCENTIVE PLAN
and
2005 EMPLOYEE INCENTIVE PLAN
(either plan, the "Plan")
Terms Adopted January 20, 2005, as amended March 7, 2005 and May 19, 2005
1. Introduction and Terms of Grant. Participant has been granted (the "Grant")
Stock Units which shall be settled by the issuance and delivery of Shares of the
Company's Common Stock. The Grant has been made under the Plan by the Stock
Option Subcommittee of the Company's Board of Directors (the "Committee"). The
name of the "Participant", the "Grant Date", the number of "Stock Units"
granted, the "Performance Period", the "Earnings Threshold", the "Earnings
Target", the "Earnings Maximum" and the "ROA Target" are stated in the attached
"Notice of Grant". The other terms and conditions of the Grant are stated in
this document and in the Plan. Certain initially capitalized words and phrases
used in this document are defined in section 10 below and elsewhere in this
document or in the Plan. Reference to Stock Units in this document is reference
to all or part of the Stock Units which are subject to the Grant, and not to
other Stock Units that have been granted or that may be granted in the future.
This Grant will be void unless the Participant executes and delivers to the
Company those certain Non-Competition and Confidentiality Covenants in the form
approved by the Committee, such delivery to be made within 180 days of the Grant
Date.
2. Grant and Adjustment. Subject to the terms and conditions stated in this
document, Participant has been granted Stock Units by the Company. As of the
Grant Date, each Stock Unit has a Settlement Value of one Share, but the number
of Shares which shall be issued and delivered pursuant to the Grant on the
settlement of each Stock Unit (the "Settlement Value") shall be subject to
adjustment as provided in Section 4.2(c) of the Plan, to adjust for, among other
corporate developments, stock splits and stock dividends. References to
Settlement Values in this document shall be deemed reference to Settlement
Values as so adjusted. As anticipated in Section 4.7 of the Plan, Shares that
have not been issued and delivered to a Participant shall be represented by
Stock Units.
3. Performance Vesting. Unless otherwise provided in sections 4 or 5 below, the
Performance Portion (as defined below) of the Stock Units will vest three
business days following the public announcement of the Company's audited,
consolidated financial results for the last fiscal year in the Performance
Period (the "Maturity Date"). A Stock Unit that has vested is herein referred to
as a "Vested Unit." Promptly following the Maturity Date, the Settlement Value
of each Vested Unit, shall be issued and delivered to or for the account of
Participant in Shares. As provided for in Section 7 below, the Company may make
such delivery to a Service Provider. In all circumstances, a Stock Unit which
fails to vest on or before the Maturity Date shall be void and shall not confer
upon the owner of such Stock Unit any rights, including any right to any Share.
In the event that any provision of this document would otherwise result in the
issuance of a fractional Share, the Company will not be obligated to issue such
fractional Share.
The "Performance Portion" shall be a percentage of the Stock Units calculated as
hereinafter provided (provided that the Performance Portion shall never exceed
100% of the Stock Units):
(a) The Performance Portion shall be 0% of the Stock Units if the Earnings
Threshold is not attained over the Performance Period.
(b) Subject to subsection (d) below, if the Earnings Threshold has been attained
over the Performance Period, the Performance Portion shall be the Earnings
Component increased by 15% if the ROA Target is attained and reduced by 15% if
the ROA Target is not attained.
(c) The "Earnings Component" shall be a percentage of the Stock Units, pro-rated
on the basis of actual Cumulative Earnings from between 30% to 87.5% of the
Stock Units so that Earnings Component will be:
(i) 30% if the Earnings Threshold is achieved but not exceeded;
(ii)50% if the Earnings Target is achieved but not exceeded; and
(iii) 87.5% if the Earnings Maximum is achieved or exceeded.
(d) In the event that the stockholders of the Company fail to approve an
amendment to Section 9.1 of the Plan allowing the use of return on average
assets as a Performance Measure prior to the end of the Performance Period, the
Earnings Component will be neither increased nor decreased whether or not the
ROA Target is attained or not attained.
"Earnings" means the Company's consolidated earnings per share on a diluted
basis, as reported in the Company's Annual Report on Form 10-K, aggregated over
the Performance Period and as adjusted by the Committee as provided for below
and in the Plan.
The "Earnings Threshold", "Earnings Target" and "Earnings Maximum" are expressed
in the Notice of Grant as functions of Earnings, as so defined.
"ROA" means the Company's consolidated return on average assets in each of the
fiscal years in the Performance Period, expressed as a percentage, and then
averaged over the entire Performance Period. In each of the fiscal years average
assets will be computed by averaging total assets at the beginning and at the
end of the fiscal year; net earnings for such fiscal years shall be divided by
average assets. Both total assets and net earnings shall be as reported in the
Company's Annual Report on Form 10-K.
The "ROA Target" is expressed in the Notice of Grant as a function of ROA, as so
defined.
Each of Earnings and ROA is a "Performance Goal". The Committee shall
appropriately adjust any evaluation of attainment of a Performance Goal to
exclude any of the following events that occurs during a Performance Period: (i)
asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the
effect of changes in tax law, accounting principles or other such laws or
provisions affecting reported results, (iv) accruals for reorganization and
restructuring programs, and (v) extraordinary non-recurring items as described
in Accounting Principles Board Opinion No. 30 and/or in management's discussion
and analysis of financial condition and results of operations appearing in said
Annual Report for the applicable year.
4. Effect of Termination of Employment on Vesting. Except as provided in this
Section 4, no Stock Units shall vest if the Participant's Date of Termination
occurs before the conclusion of the Performance Period:
(a) if the Participant's Date of Termination occurs by reason of death or
Disability within the last fiscal year of the Performance Period, Stock
Units shall vest as provided in Section 3 above as
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though the Participant's Date of Termination had not occurred before the
conclusion of the Performance Period;
(b) if the Participant's Date of Termination occurs by reason of death or
Disability within the second fiscal year of the Performance Period, 60% of
Stock Units shall vest on the date of such death or Disability;
(c) if the Participant's Date of Termination occurs by reason of death or
Disability within the first fiscal year of the Performance Period, 30% of
Stock Units shall vest on the date of such death or Disability;
(d) if the Participant's Date of Termination occurs by reason of Cause, no
Stock Units shall vest;
(e) if the Participant's Date of Termination occurs by reason of Participant's
voluntary resignation, no Stock Units shall vest; and
(f) if the Participant's Date of Termination occurs at the initiative of the
Participant's employer (but not for Cause) the Committee reserves the right
to vest up to the following percentages of the Stock Units, but may
condition such vesting upon Participant's release of the Company and its
affiliates from all claims, Participant's agreement to reasonable
non-competition covenants or both:
(i) 100% of the Stock Units if the Date of Termination occurs in the
last fiscal year of the Performance Period;
(ii) 70% of the Stock Units if the Date of Termination occurs in the
second fiscal year of the Performance Period; and
(iii)40% of the Stock Units if the Date of Termination occurs in the
first fiscal year of the Performance Period.
In the event of vesting pursuant to subsections (b) through (f) above, the
Settlement Value of each Vested Unit shall, promptly after vesting, be issued
and delivered to or for the account of Participant in Shares. As provided for in
Section 7 below, the Company may make such delivery to a Service Provider.
5. Effect of Change in Control on Vesting. All Stock Units shall vest upon the
date of a Change of Control unless the Participant's Date of Termination occurs
before the date of the Change of Control. The Committee reserves the right to
unilaterally amend the definition of a "Change of Control" so as to specify
additional circumstances which shall be deemed to constitute a Change of
Control. In the event of vesting pursuant to this Section 5, the Settlement
Value of each Vested Unit shall, promptly after vesting, be issued and delivered
to or for the account of Participant in Shares. As provided for in Section 7
below, the Company may make such delivery to a Service Provider.
6. No Dividends or Interest. No dividends or interest shall accrue or be payable
upon any Stock Unit. Until a Share is issued and delivered it shall not be
registered in the name of the Participant.
7. Withholding for Taxes. All distributions of Shares shall be subject to
withholding of all applicable taxes as computed by the Tiffany and Company
finance department, and the Participant shall make arrangements satisfactory to
the Company to provide the Company (or any Related Company) with funds necessary
for such withholding before the Shares are delivered. Without limitation to the
Company's right to establish other arrangements, the Company may: (i) designate
a single broker or other financial
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services provider ("Services Provider") to establish trading accounts for
Participants (each a "Participant's Trading Account"); (ii) deliver Shares to
Participant's Trading Account; (iii) provide Services Provider with information
concerning the applicable tax withholding rates for Participant; (iv) cause
Services Provider to sell, on behalf of Participant, sufficient Shares to cover
the Company's tax withholding obligations with respect to any delivery of Shares
to Participant (a "Covering Sale"); and (v) cause Services Provider to remit
funds resulting from such Covering Sale to Company or any Related Company that
is the employer of Participant. As a condition to distribution the Company may
require the Participant to provide the Services Provider with such signed
applications, authorizations, powers and other documents necessary to accomplish
the foregoing. Participant may, by written notice to the Company addressed to
the Company's Secretary, and given no less than ten (10) business days before
the Maturity Date or other applicable vesting date, elect to avoid such a
Covering Sale by delivering with such notice a bank-certified check payable to
the Company (or other type of check or draft payable to the Company and
acceptable to the Secretary) in the estimated amount of any such withholding
required, such estimate to be provided by the Tiffany and Company finance
department. The Committee may approve other methods of withholding, as provided
for in the Plan, before the Shares are delivered.
8. Transferability. The Stock Units are not transferable otherwise than by will
or the laws of descent and distribution, and shall not be otherwise transferred,
assigned, pledged, hypothecated or otherwise disposed of in any way, whether by
operation of law or otherwise, nor shall it be subject to execution, attachment
or similar process. Upon any attempt to transfer the Stock Units otherwise than
as permitted herein or to assign, pledge, hypothecate or otherwise dispose of
the Stock Units otherwise than as permitted herein, or upon the levy of any
execution, attachment or similar process upon the Grant, the Grant shall
immediately terminate and become null and void.
9. Definitions. For the purposes of the Grant, the words and phrases listed
below shall be defined as follows:
a. Affiliate and Person. "Affiliate" means, with reference to any Person, any
second Person that controls, is controlled by, or is under common control with,
any such first Person, directly or indirectly. "Person" means any individual,
firm, corporation, partnership, limited partnership, limited liability
partnership, business trust, limited liability company, unincorporated
association or other entity, and shall include any successor (by merger or
otherwise) of such entity.
b. Cause. "Cause" means a termination of Participant's employment, involuntary
on Participant's part, which is the result of:
(i) Participant's conviction or plea of no contest to a felony involving
financial impropriety or a felony which would tend to subject the
Company or any of its Affiliates to public criticism or materially
interfere with Participant's continued service to the Company or its
Affiliate;
(ii) Participant's willful and unauthorized disclosure of material
"Confidential Information" (as that term is defined in the
Non-Competition and Confidentiality Covenants) which disclosure
actually results in substantive harm to the Company's or its
Affiliate's business or puts such business at an actual competitive
disadvantage;
(iii)Participant's willful failure or refusal to perform substantially all
such proper and achievable directives issued by Participant's superior
(other than: (A) any such failure resulting from Participant's
incapacity due to physical or mental illness, or (B) any such refusal
made by Participant in good faith because Participant believes such
directives to be illegal, unethical or immoral) after a written demand
for substantial performance is delivered to Participant on behalf of
Company, which demand specifically identifies the
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manner in which Participant has not substantially performed
Participant's duties, and which performance is not substantially
corrected by Participant within [ten (10)] days of receipt of such
demand;
(iv) Participant's commission of any willful act which is intended by
Participant to result in his personal enrichment at the expense of the
Company or any of its Affiliates, or which could reasonably be
expected by him to materially injure the reputation, business or
business relationships of the Company or any of its Affiliates;
(v) A theft, fraud or embezzlement perpetrated by Participant upon Company
or any of its Affiliates.
For purposes of this definition, no act or failure to act on Participant's part
shall be deemed "willful" unless done, or omitted to be done, by Participant in
bad faith toward, or without reasonable belief that such action or omission was
in the best interests of, Company or its Affiliate. Notwithstanding the
foregoing, Participant shall not be deemed to have been terminated for Cause for
the purposes of this Plan unless and until there shall have been delivered to
Participant a copy of a resolution duly adopted by the affirmative vote of not
less than three-fourths (3/4th) of the entire membership of the Board (exclusive
of the Participant if Participant is a member of such Board) at a meeting called
and held for such purpose (after reasonable notice to Participant and an
opportunity for Participant, together with counsel for Participant, to be heard
before such Board), finding that, in the good faith opinion of such Board, Cause
exists as set forth above.
c. Change of Control. A "Change of Control" shall be deemed to have occurred if
:
(i) any person (as used herein, the word "person" shall mean an individual
or an entity) or group of persons acting in concert has acquired
thirty-five percent (35%) in voting power or amount of the equity
securities of the Company (including the acquisition of any right,
Grant warrant or other right to obtain such voting power or amount,
whether or not presently exercisable);
(ii) individuals who constituted the Board of Directors of the Company on
May 1, 1998 (the "Incumbent Board") cease for any reason to constitute
at least a majority of such Board of Directors, provided that any
individual becoming a director subsequent to May 1, 1988 whose
election, or nomination for election by the Company's stockholders,
was approved by a vote of at least three-quarters of the directors
comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such
individual is named as a nominee for director) shall be, for the
purposes of this section 9(c), considered as though such individual
were a member of the Incumbent Board; or
(iii)any other circumstance with respect to a change in control of the
Company occurs which the Committee deems to be a Change in Control of
the Company.
A Change of Control which constitutes a Terminating Transaction will be
deemed to have occurred as of fourteen days prior to the date scheduled for
the Terminating Transaction.
d. Code. The Internal Revenue Code of 1986, as amended.
e. Date of Termination. The Participant's "Date of Termination" shall be the
first day occurring on or after the Grant Date on which Participant's
employment with the Company and all Related Companies terminates for any
reason; provided that a termination of employment shall not be
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deemed to occur by reason of a transfer of the Participant between the
Company and a Related Company or between two Related Companies; and further
provided that the Participant's employment shall not be considered
terminated while the Participant is on a leave of absence from the Company
or a Related Company approved by the Participant's employer or required by
applicable law. If, as a result of a sale or other transaction, the
Participant's employer ceases to be a Related Company (and the
Participant's employer is or becomes an entity that is separate from the
Company), the occurrence of such transaction shall be treated as the
Participant's Date of Termination at the initiative of the Participant's
employer.
f. Disability. Except as otherwise provided by the Committee, the Participant
shall be considered to have a "Disability" if he or she is unable to engage
in any substantial gainful activity by reason of a medically determinable
physical or mental impairment, which impairment, in the opinion of a
physician selected by the Secretary of the Company, is expected to have a
duration of not less than 120 days.
g. Plan Definitions. Except where the context clearly implies or indicates the
contrary, a word, term, or phrase used in the Plan shall have the same
meaning in this document.
h. Market Value. The average of the high and low prices for the Shares as
reported on The New York Stock Exchange for (i) the applicable vesting date
if the vesting is a trading day, or (ii) if the vesting date is not a
trading day, the trading day next following the vesting date.
i. Terminating Transaction. As used herein, the phrase "Terminating
Transaction" shall mean any one of the following:
(i) the dissolution or liquidation of the Company;
(ii) a reorganization, merger or consolidation of the Company; or
(iii) a reorganization, merger or consolidation of the Company with one or
more corporations as a result of which the Company goes out of existence or
becomes a subsidiary of another corporation, or upon the acquisition of
substantially all of the property or more than eighty percent (80%) of the
then outstanding stock of the Company by another corporation.
10. Heirs and Successors. The terms of the Grant shall be binding upon, and
inure to the benefit of, the Company and its successors and assigns, and upon
any person acquiring, whether by merger, consolidation, purchase of assets or
otherwise, all or substantially all of the Company's assets and business.
Participant may designate a beneficiary of his/her rights under the Grant by
filing written notice with the Secretary of the Company. In the event of the
Participant's death prior to the full maturity of the Grant, the Shares will be
delivered to such Beneficiary to the extent that it was matured on the
Participant's Termination Date. If the Participant fails to designate a
Beneficiary, or if the designated Beneficiary dies before the Participant, any
Shares issuable hereunder will be delivered to the Participant's estate.
11. Administration. The authority to manage and control the operation and
administration of the Grant shall be vested in the Committee, and the Committee
shall have all powers with respect to the Grant as it has with respect to the
Plan. Any interpretation of the Grant by the Committee and any decision made by
it with respect to the Grant is final and binding.
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12. Plan Governs. Notwithstanding anything in this Agreement to the contrary,
the terms of the Grant shall be subject to the terms of the Plan, a copy of
which may be obtained by the Participant from the office of the Secretary of the
Company.
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