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EXHIBIT 10.3
CROWN CRAFTS, INC.
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT, made and entered into this 23rd day of
July, 2001 (the "Grant Date") by and between CROWN CRAFTS, INC., a Georgia
corporation (the "Company"), and _______________________ (the "Grantee");
WITNESSETH:
WHEREAS, the CROWN CRAFTS, INC. RESTRICTED STOCK PLAN (the "Plan") has
been adopted by the Company; and
WHEREAS, Article II of the Plan authorizes the Committee to cause the
Company to enter into a written agreement with the Grantee setting forth the
form and the amount of any Award and any conditions and restrictions of the
award imposed by the Plan and the Committee; and
WHEREAS, the Committee desires to make an award of Restricted Stock to
the Grantee;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt of which is
hereby acknowledged, the Company and the Grantee hereby agree as follows:
1. Terms of Award.
(a) The number of shares of Restricted Stock awarded
under this Restricted Stock Agreement shall be
_____________________________ (________) shares. Shares of Restricted
Stock are shares of Stock granted under this Restricted Stock Agreement
and are subject to the terms of this Agreement and the Plan.
(b) The "Restricted Period" is the period of time
beginning on the Grant Date and ending on July 23, 2003.
2. General Definitions. Any capitalized terms herein shall have
the meaning set forth in the Plan, and, in addition, for purposes of this
Restricted Stock Agreement, each of the following terms, when used herein, shall
have the meaning set forth below:
(a) Cause. For purposes of this Agreement, a termination
of employment is for "Cause" if the Grantee has been convicted of a
felony or if the termination is evidenced by a resolution adopted in
good faith by two-thirds (2/3) of the Board that the Grantee (i)
intentionally and continually failed substantially to perform his or
her reasonably assigned duties with the Company (other than a failure
resulting from the Grantee's incapacity due to physical or mental
illness or from the Grantee's assignment of duties that would
constitute Good Reason) which failure continued for a period of at
least thirty (30) days after a written
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notice of demand for substantial performance has been delivered to the
Grantee specifying the manner in which the Grantee has failed
substantially to perform, or (ii) intentionally engaged in illegal
conduct or gross misconduct which results in material economic harm to
the Company; provided, however, that no termination of the Grantee's
employment shall be for Cause as set forth in clause (ii) above until
(x) there shall have been delivered to the Grantee a copy of a written
notice setting forth that the Grantee was guilty of the conduct set
forth in clause (ii) and specifying the particulars thereof in detail,
and (y) the Grantee shall have been provided an opportunity to be heard
in person by the Board (with the assistance of the Grantee's counsel if
the Grantee so desires). No act, nor failure to act, on the Grantee's
part, shall be considered "intentional" unless the Grantee has acted,
or failed to act, with a lack of good faith and with a lack of
reasonable belief that the Grantee's action or failure to act was in
the best interests of the Company. Any act, or failure to act, based
upon authority given pursuant to a resolution duly adopted by the Board
or upon the instructions of any senior officer of the Company who is
senior to Grantee, or based upon the advice of counsel for the Company,
shall be conclusively presumed to be done, or omitted to be done, by
the Grantee in good faith and in the best interests of the Company. Any
termination of the Grantee's employment by the Company hereunder shall
be deemed to be a termination other than for Cause unless it meets all
requirements of this Section 2(a).
(b) Change in Control. For purposes of this Agreement, a
"Change in Control" shall mean any of the following:
(i) An acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting
Securities") by any "Person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), immediately
after which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
twenty percent (20%) or more of the combined voting power of
the Company's then outstanding Voting Securities; provided,
however, in determining whether a Change in Control has
occurred, (1) Voting Securities which are acquired in a
"Non-Control Acquisition" (as hereinafter defined) and (2)
shares acquired by Bank of America, N.A., The Prudential
Insurance Company of America and Wachovia Bank, N.A. pursuant
to that certain Subordinated Note and Warrant Purchase
Agreement dated as of July 23, 2001 shall not constitute an
acquisition which would cause a Change in Control. A
"Non-Control Acquisition" shall mean an acquisition by (A) an
employee benefit plan (or a trust forming a part thereof)
maintained by (x) the Company or (y) any corporation or other
Person of which a majority of its voting power or its voting
equity securities or equity interest is owned, directly or
indirectly, by the Company (for purposes of this definition, a
"Subsidiary"), (B) the Company or its subsidiaries, or (C) any
Person in connection with a "Non-Control Transaction" (as
hereinafter defined);
(ii) The eight (8) individuals who are appointed
or elected to the Board as set forth in the Section 3.13 of
the Merger Agreement by and between Design Works Holding
Company, Design Works Inc., Crown Crafts Designers, Inc. and
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Crown Crafts, Inc. (the "Incumbent Board"), cease for any
reason to constitute at least a majority of the members of the
Board; provided, however, that if the election, or nomination
for election by the Company's common shareholders, of any new
director was approved by a vote of at least a majority of the
Incumbent Board, such new director shall, for purposes of this
Agreement, be considered as a member of the Incumbent Board;
provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual
initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11
promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board (a "Proxy Contest"),
including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest; or
(iii) Approval by shareholders of the Company of:
(A) A merger, consolidation or
reorganization involving the Company, unless such
merger, consolidation or reorganization is a
"Non-Control Transaction." A "Non-Control
Transaction" shall mean a merger, consolidation or
reorganization of the Company where:
(x) the shareholders of the
Company, immediately before such merger,
consolidation or reorganization, own
indirectly or indirectly immediately
following such merger, consolidation or
reorganization, at least a majority of the
combined voting power of the outstanding
voting securities of the corporation
resulting from such merger, consolidation or
reorganization (the "Surviving Corporation")
in substantially the same proportion as
their ownership of the Voting Securities
immediately before such merger,
consolidation or reorganization,
(y) the individuals who were
members of the Incumbent Board immediately
prior to the execution of the agreement
providing for such merger, consolidation or
reorganization constitute at least a
majority of the members of the board of
directors of the Surviving Corporation, or a
corporation beneficially directly or
indirectly owning a majority of the Voting
Securities of the Surviving Corporation, and
(z) no Person other than (i)
the Company, (ii) any subsidiary of the
Company, (iii) any employee benefit plan (or
any trust forming a part thereof) maintained
by the Company, the Surviving Corporation or
any subsidiary of the Company, or (iv) any
Person who, immediately prior to such
merger, consolidation or reorganization, had
Beneficial Ownership of twenty percent (20%)
or more of the then outstanding Voting
Securities), has Beneficial
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Ownership of twenty percent (20%) or more of
the combined voting power of the Surviving
Corporation's then outstanding voting
securities;
(B) A complete liquidation or dissolution of the
Company; or
(C) An agreement for the sale or other
disposition of all or substantially all of the assets of the
Company to any Person (other than a transfer to a subsidiary
of the Company).
Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any Person (the "Subject Person")
acquired Beneficial Ownership of more than the permitted amount of the
then outstanding Voting Securities as a result of the acquisition of
Voting Securities by the Company which, by reducing the number of
Voting Securities then outstanding, increases the proportional number
of shares Beneficially Owned by the Subject Person, provided that if a
Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of Voting Securities by the Company, and
after such share acquisition by the Company, the Subject Person becomes
the Beneficial Owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting Securities
Beneficially Owned by the Subject Person, then a Change in Control
shall occur.
(c) Code shall mean the Internal Revenue Code of 1986, as
amended.
(d) Good Reason. For purposes of this Agreement, "Good
Reason" shall mean a good faith determination by the Grantee, in the
Grantee's sole and absolute judgment, that any one or more of the
following events or conditions has occurred, without the Grantee's
express written consent:
(i) The assignment to the Grantee of any duties
inconsistent with the Grantee's position (including, without
limitation, status, titles and reporting requirements),
authority, duties or responsibilities, or any other action by
the Company that results in a material diminution in such
position, authority, duties or responsibilities, excluding for
this purpose isolated and inadvertent action not taken in bad
faith and remedied by the Company promptly after receipt of
notice thereof given by the Grantee;
(ii) A material reduction by the Company of the
Grantee's base salary as the same may be increased from time
to time, or a change in the eligibility requirements or
performance criteria under any bonus, incentive or
compensation plan, program or arrangement under which the
Grantee is covered which adversely affects the Grantee;
(iii) any failure to pay the Grantee any compensation
or benefits to which he or she is entitled within five (5)
days of the date due;
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(iv) a failure to increase the Grantee's base salary
at least annually at a percentage of base salary no less than
the average percentage increases (other than increases
resulting solely from the Grantee's promotion) granted to the
Grantee during the three (3) prior full fiscal years (or such
less number of full fiscal years during which the Grantee was
employed);
(v) the Company's requiring the Grantee to be based
anywhere other than within fifty (50) miles of the Grantee's
job location, except for reasonably required travel on the
Company's business which is not materially increased;
provided, however, this provision does not apply if Grantee is
the Chief Executive Officer of the Company;
(vi) without replacement by a plan providing benefits
to the Grantee substantially equivalent to or greater than
those discontinued, the failure by the Company to continue in
effect, within its maximum stated term, any pension, bonus,
incentive, stock ownership, purchase, option, life insurance,
health, accident disability, or any other employee benefit
plan, program or arrangement, in which the Grantee
participates, or the taking of any action by the Company that
would adversely affect the Grantee's participation or
materially reduce the Grantee's benefits under any of such
plans;
(vii) the taking of any action by the Company that
would materially adversely affect the physical conditions in
or under which the Grantee performs his employment duties,
provided that the Company may take action with respect to such
conditions so long as such conditions are at least
commensurate with the conditions in or under which an officer
of the Grantee's status would customarily perform his
employment duties;
(viii) the insolvency or the filing (by any party,
including the Company) of a petition for bankruptcy by the
Company;
(ix) any purported termination of the Grantee's
employment for Cause by the Company which does not comply with
the terms of Section 2(a) hereof; or
(x) any breach by the Company of any material
provision of the Grantee's Employment Agreement with the
Company, if any.
The Grantee's right to terminate his employment pursuant to
this Section 2(d) shall not be affected by his incapacity due to
physical or mental illness.
(e) "Total Disability" means a disability of Grantee
resulting in a complete inability to engage in the Grantee's regular
occupation by reason of any physical or mental impairment that can be
expected to result in death or that has lasted or can be expected to
last for a continuous period of not less than twelve (12) months, all
as determined by a
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licensed physician acceptable to the Committee and evidenced by a
certificate to the Company; provided, however, Grantee shall have the
right to obtain a second opinion from a licensed physician. If such
second opinion differs from that of the physician selected by the
Committee, a third licensed physician acceptable to both the Committee
and the Grantee shall be consulted to render an opinion, which third
opinion shall be final and binding on all parties hereto.
3. Grant of Award. Upon the terms and subject to the conditions
and limitations hereinafter set forth, the Grantee is hereby granted the number
of shares of Restricted Stock set forth in Section 1.
4. Dividends and Voting Rights. The Grantee shall be entitled to
receive any dividends paid with respect to shares of Restricted Stock that
become payable during the Restricted Period; provided, however, that no
dividends shall be payable to or for the benefit of the Grantee with respect to
record dates occurring prior to the Grant Date, or with respect to record dates
occurring on or after the date, if any, on which the Grantee has forfeited the
Restricted Stock. The Grantee shall be entitled to vote the shares of Restricted
Stock during the Restricted Period to the same extent as would have been
applicable to the Grantee if the Grantee was then vested in the shares;
provided, however, that the Grantee shall not be entitled to vote the shares
with respect to record dates for such voting rights arising prior to the Grant
Date, or with respect to record dates occurring on or after the date, if any, on
which the Grantee has forfeited the Restricted Stock.
5. Deposit of Shares of Restricted Stock. Each certificate issued
in respect of shares of Restricted Stock granted under this Agreement shall be
registered in the name of the Grantee and shall be deposited in a bank
designated by the Committee. The grant of Restricted Stock is conditioned upon
the Grantee endorsing in blank a stock power for the Restricted Stock.
6. Transfer and Forfeiture of Shares. If the Grantee's
termination of employment does not occur during the Restricted Period, then, at
the end of the Restricted Period, the Grantee shall become vested in the shares
of Restricted Stock, and shall own the shares free of all restrictions otherwise
imposed by this Agreement. The Grantee shall become vested in the shares of
Restricted Stock, and become owner of the shares free of all restrictions
otherwise imposed by this Agreement, prior to the end of the Restricted Period,
as follows:
(a) The Grantee shall become fully vested in the shares
of Restricted Stock upon the Company's termination of Grantee's
employment other than for Cause,
(b) The Grantee shall become fully vested in the shares
of Restricted Stock upon the Grantee's termination of employment with
the Company for Good Reason;
(c) The Grantee shall become fully vested in the shares
of Restricted Stock upon the Grantee's termination of employment with
the Company because of the Grantee's death or Total Disability;
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(d) The Grantee shall become fully vested in the shares
of Restricted Stock upon the date of a Change in Control of the
Company, if the Grantee does not terminate employment with the Company
on or before the Change in Control.
Shares of Restricted Stock may not be sold, assigned, transferred, pledged or
otherwise encumbered until the expiration of the Restricted Period or, if
earlier, until the Grantee is vested in the shares. Except as otherwise provided
in this paragraph 6, if the Grantee's termination of employment occurs prior to
the end of the Restricted Period, the Participant shall forfeit the Restricted
Stock as of the Grantee's termination of employment.
7. Taxes and Withholding. Notwithstanding the foregoing, no
shares of Stock will be issued unless the Grantee (or his or her representative
as the case may be) satisfies the applicable withholding obligations. The
Committee, in its sole discretion, and subject to such requirements as the
Committee may impose prior to the occurrence of such withholding, may permit
such withholding obligations to be satisfied through cash payment by the
Grantee, through the surrender of shares of Stock which the Grantee already
owns, or through the surrender of shares of Stock to which the Grantee is
otherwise entitled under the Plan.
In the event Grantee elects income tax treatment for this Award under
Section 83(b) of the Code, the Company shall loan Grantee the amount of such
additional income tax incurred by Grantee, with no interest, to be repaid over a
three (3) year time period, or such shorter time period as mutually agreeable to
the Company and Grantee, through biweekly payroll deductions. In connection with
such loan, Grantee shall execute any such notes or loan documents as required by
the Company in its discretion.
8. Holder's Exercise Subject to Compliance with Securities Laws.
Notwithstanding the grant of this Award, in whole or in part, in accordance with
all other provisions of this Award, the Company shall have no obligation to
issue Stock pursuant thereto unless and until the Grantee furnishes the Company
an agreement (in such form as the Committee may specify) in which the Grantee
(or any person acting on his behalf) represents that the Stock acquired by him
is being acquired for investment and not with a view to the sale or distribution
thereof, or such other representations as may be required by the Committee in
accordance with the advice of legal counsel, unless the Committee shall have
received advice from legal counsel that such representation is not required.
9. Heirs and Successors. This Agreement shall be binding on, 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. If any
rights of the Grantee or benefits distributable to the Grantee under this
Agreement have not been exercised or distributed, respectively, at the time of
the Grantee's death, such rights shall be exercisable by the Designated
Beneficiary, and such benefits shall be distributed to the Designated
Beneficiary, in accordance with the provisions of this Agreement and the Plan.
The "Designated Beneficiary" shall be the beneficiary(ies) designated by the
Grantee in a writing filed with the Committee in such form and at such time as
the Committee shall require. If a deceased Grantee fails to designate a
beneficiary, or if the Designated Beneficiary does not survive the
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Grantee, any rights that would have been exercisable by the Grantee and any
benefits distributable to the Grantee shall be exercised by or distributed to
the legal representative of the estate of the Grantee. If a deceased Grantee
designates a beneficiary but the Designated Beneficiary dies before the
Designated Beneficiary's exercise of all rights under this Agreement or before
the complete distribution of benefits to the Designated Beneficiary under this
Agreement, then any rights that would have been exercisable by the Designated
Beneficiary shall be exercised by the legal representative of the estate of the
Designated Beneficiary, and any benefits distributable to the Designated
Beneficiary shall be distributed to the legal representative of the estate of
the Designated Beneficiary.
10. No Right to Continued Employment. This Award does not confer
upon the Grantee the right to continued employment with the Company or any
affiliate, nor shall it interfere with the right of the Company or any affiliate
to terminate his or her employment at any time.
11. Miscellaneous.
(a) This Award has been issued pursuant to the Plan and
shall be subject to, and governed by, the terms and provisions thereof.
The Grantee hereby agrees to be bound by all the terms and provisions
of the Plan. In the event of any conflict between the terms of the Plan
and this Agreement, the provisions of the Plan shall govern.
(b) This Agreement shall be governed by the laws of the
State of Georgia.
(c) This Agreement may be amended by written Agreement of
the Grantee and the Company, without the consent of any other person.
IN WITNESS WHEREOF, the Company and the Grantee have executed this
Restricted Stock Agreement as of the day and year first above written.
CROWN CRAFTS, INC.
By:
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Its:
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GRANTEE:
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