Exhibit 10.38

X-RITE, INCORPORATED

RESTRICTED STOCK AGREEMENT

UNDER THE X-RITE, INCORPORATED

2008 OMNIBUS LONG TERM INCENTIVE PLAN

 

  Grantee:                                      
                                         
                                         
                                         
                                         
                                         
Social Security Number:                                  
                                         
                                        
                                         
                                                         Grant Date:   

October 30, 2009

  Number of Shares Awarded:                               
                              

    Per Share Fair Market Value on Grant Date:   $  

 

1. Terms. X-Rite, Incorporated (the “Company”) has awarded to Grantee a
Restricted Stock award, effective as of the Grant Date. This Agreement is
subject to the terms and conditions of the X-Rite, Incorporated 2008 Omnibus
Long Term Incentive Plan (the “Plan”), as amended from time to time. All of the
defined terms contained in this Agreement shall have the same meaning as is set
forth in the Plan. If any inconsistency exists between the provisions of this
Agreement and the Plan, the Plan shall govern.

2. Restricted Stock Grant. Effective as of the Grant Date and in line with the
recapitalization approved by the shareholders on October 28, 2008, the Company
hereby grants the Grantee the number of Shares of the Company’s common stock
shown above (the “Shares Awarded”), subject to the restrictions set forth below
and in Exhibit A. The Grantee hereby acknowledges and agrees to such
restrictions and the other terms and conditions set forth herein. Until the
restrictions lapse, the Shares Awarded are not transferable by the Grantee by
means of sale, assignment, gift, exchange, pledge or otherwise.

3. Restriction. The Shares Awarded shall be subject to the restrictions placed
on the certificates issued to the Grantee representing the Shares as set forth
in Exhibit A to this Agreement (the “Restriction Period.”). The release of the
restrictions is based on the achievement of certain performance targets outlined
in Exhibit A to this Agreement.

4. Forfeiture. In the event the employment relationship between the Company and
Grantee terminates during the Restriction Period, the Grantee’s rights with
respect to the Shares Awarded shall be forfeited unless they are covered by
lapsed vesting restrictions provided in this Section 4. In the event the
employment relationship between the Company and Grantee terminates during the
Restriction Period due to the Grantee’s retirement at age sixty (60) or greater,
death, or disability, the restrictions shall be deemed to have lapsed with
respect to that portion of the Shares Awarded which is proportional to the
amount of the Restriction Period which has expired. “Disability” means a
physical or mental infirmity which impairs the Grantee’s ability to
substantially perform Grantee’s duties of the Grantee’s regular occupation with
the Company, which continues for a period of at least one hundred and eighty
(180) consecutive days.

5. Special Provisions. Participants in the X-Rite, Incorporated Change in
Control Severance Plan for Senior Executives (the “Change in Control Plan”) who
receive this one-time equity award will not receive accelerated vesting in
respect thereof upon a qualifying termination within twenty-four months after
the issuance of shares of the Company’s common stock to OEPX, LLC, a Delaware
limited liability company managed by One Equity Partners (as described in the
Company’s September 26, 2008 Proxy Statement) which occurred on October 28,
2008, unless the qualifying termination is in connection with, or following, a
change in control transaction (as defined in the Change in Control Plan) that is
consummated after the consummation of such issuance.

6. Adjustments. In the event of any recapitalization of the Company, then the
number of Shares shall be appropriately adjusted as provided in the Plan.

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7. Procedure on Forfeiture. In the event of any forfeiture under this Agreement,
the certificate representing the forfeited Shares shall be returned to the
Company immediately on demand. In the event of a failure to comply with any such
demand, the Plan authorizes the Company to bring suit to enforce the obligation
to return forfeited Shares, and to recover any related costs and expenses,
including attorneys’ fees. The Shares are unique property and the Grantee’s
obligation to return the forfeited Shares is specifically enforceable by
mandatory injunction. Any dispute with respect to the Shares or this Agreement
shall be resolved exclusively by the courts seated in Kent County, Michigan, or
the Federal District Court for the Western District of Michigan.

8. Post-Employment Competition. In the event the Grantee engages in any activity
competitive to any business of the Company that is being actively conducted or
planned at the time of termination of Grantee’s employment with the Company,
prior to the expiration of two (2) years after such termination of employment,
either directly or indirectly, as a proprietor, partner, employee, officer,
director, consultant, or holder of any equity interest in any competitive
corporation or limited liability company (excluding less than two percent
(2%) interest in any publicly traded entity), then Grantee shall forfeit all
economic benefits derived by the Grantee with respect to all restricted stock
grants granted to the Grantee that were outstanding and not vested as of, or
granted after a date, that is six (6) months prior to the date the competitive
activity commenced. Forfeiture of economic benefits shall mean payment to the
Company of an amount equal to the difference between the price paid by the
Grantee for such shares, if any, and the market price for those shares as of the
date the restrictions lapsed with respect to those shares.

9. Rights as a Stockholder. The Grantee shall have all the rights of a
stockholder of the Company in respect of the Shares Awarded during the
Restriction Period, including the right to vote and receive dividends, except
for the right to transfer the Shares Awarded as set forth in Section 2.

10. Miscellaneous. This Agreement contains the entire agreement of the parties
with respect to its subject matter, and there are no other terms and conditions
except as expressly set forth in this Agreement and in the Plan. This Agreement
may be amended or modified only by means of a written instrument signed by an
authorized representative of the Company and the Grantee. Grantee’s rights
pursuant to this Agreement may not be assigned, in whole or in part, directly or
indirectly, without the prior written consent of an authorized officer of the
Company. This Agreement shall be binding upon and inure to the benefit of the
parties hereto, their respective heirs, personal representatives, successors,
and permitted assigns.

 

X-RITE, INCORPORATED By    

I hereby acknowledge that this Restricted Stock Agreement is subject to all of
the terms and conditions of the X-Rite, Incorporated 2008 Omnibus Long Term
Incentive Plan, and that I have received a copy of the Plan and the Company’s
most recent proxy statement and annual report furnished to shareholders. I also
understand that important income tax consequences are determined by whether I
file an election with the Internal Revenue Service pursuant to Section 83 of the
Internal Revenue Code of 1986, as amended, and I am not relying on the Company
for any tax advice.

 

         Grantee: Date:   

 

     

 

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Exhibit A—Recapitalization Restricted Stock/Unit Award

AWARD

[            ] restricted shares (“RS”), with performance target achievement on
an annual or cumulative fiscal calendar basis over each of a three, four and
five year period.

 

Fiscal Calendar                   Performance Period   

2009

  

2010

  

2011

  

2012

  

2013

     

Tranche 1

                  Tranche 2                   Tranche 3                       
                      

PERFORMANCE TARGETS

 

Annual—Target Adjusted EBITDA (in millions)

          

2009

  

2010

  

2011

  

2012

  

2013

                                           

 

Cumulative—Target Adjusted EBITDA (in millions)

          

2009

  

2010

  

2011

  

2012

  

2013

     

Tranche 1

   $    $    $          Tranche 2    $    $    $    $       Tranche 3    $    $
   $    $    $   

VESTING

 

  •  

Vesting of RS is based on the achievement of annual and/or cumulative adjusted
EBITDA targets during the performance period for each fiscal year.

 

 

•

 

The earned RS will be delivered after the performance period’s financial results
have been audited and approved by both the Audit Committee and the Compensation
Committee of the Board of Directors, generally in the 1st quarter of the year
following the performance period.

TAXATION

Generally, under federal income tax rules, an employee receiving a RS Award is
not taxed at the time of the grant. Instead, the employee is taxed when the
restriction is lifted. The amount of income subject to tax (the “gain”) is the
fair market value of the grant at the time of release (number of shares times
XRIT closing price on date of release). As many countries other the U.S. treat
RS as taxable at issue based on beneficial ownership, we have shifted to issuing
Restricted Stock Units (“RSUs”) to non-U.S. employees. In the case of RSUs, the
actual shares are not issued until vesting is determined. Although RSUs do not
have voting rights or dividend rights (X-Rite does not pay a stock dividend at
this time), the recipient is protected from inadvertent tax consequences. All
other terms of a RSU award are the same as those of RS.