Exhibit 10.3


 


METHODE ELECTRONICS, INC.


2010 CASH INCENTIVE PLAN


 


RSA TANDEM CASH AWARD


FORM AWARD AGREEMENT


 


This Cash Incentive Award Agreement (the “Award
Agreement”), effective as of November 8, 2010 (the “Effective Date”), is
entered into by and between Methode Electronics, Inc., a Delaware
corporation (the “Company”), and
                                      
(“Grantee”).


 


WHEREAS, the Company desires to reward Grantee for his
services to the Company and to encourage him to continue to work for the benefit
of the Company in a manner that will benefit all Company shareholders.


 


NOW, THEREFORE, in consideration of the premises and
the mutual covenants and obligations hereinafter set forth, the Company agrees
to pay Grantee certain cash amounts under the Company’s 2010 Cash Incentive
Plan (the “Plan”) on the terms and conditions set forth herein.


 


1.             Award
Amount.  The Company shall pay to
Grantee a cash award (the “Cash Award”) based on the Company’s internal
enterprise value at the end of the Measurement Period (“Internal Enterprise
Value”), provided that a Change of Control has not occurred prior to the end of
the Measurement Period.  The “Measurement Period” is the fiscal year of
the Company ending on May 2, 2015, the “Vesting Date” is the last day of
the Measurement Period and the “Award Period” is the period between the date of
this Award Agreement and the Vesting Date. 
For this purpose, Internal Enterprise Value shall equal (1) the
product of (i) the EBITDA for the recently completed fiscal year and (ii) the “Historic
Multiple of EBITDA” which is set forth on Exhibit A hereto, (2) plus
cash and short-term investments on hand at the end of the Measurement Period, (3) less
debt and preferred stock at the end of the Measurement Period, and (4) adjusted
for equity issuances during the Award Period in connection with acquisitions or
capital raising initiatives.  For this
purpose, (A) EBITDA means the Company’s earnings before interest, taxes,
depreciation and amortization; (B) in calculating cash on hand at the end
of the Measurement Period, pro forma adjustments will be made in order to
provide for a quarterly cash dividend payment of seven cents ($0.07) per share
during the Award Period (regardless of the actual amount of dividends paid
during the Award Period); and (C) any and all transaction costs and
expenses (out of pocket) and earnings with respect to an acquisition undertaken
pursuant to an acquisition agreement executed after October 31, 2013 will
be excluded from the calculation of internal enterprise value.


 


The threshold and target levels of performance (the “Threshold
Internal Enterprise Value” and the “Target Internal Enterprise Value,”  respectively) are set forth on Exhibit A
hereto.  The amount of the Cash Award, if
any, shall be based upon the performance percentage as calculated pursuant to Exhibit B
hereto (“Performance Percentage”), the number of shares of Restricted Stock
awarded to Grantee pursuant to the Performance Based RSA Award Agreement dated
as of the date hereof (the “RSA shares”) and the May 1, 2015 closing price
of the Common Stock of the Company. 
Pursuant to Exhibit B, the Performance Percentage shall equal a
fraction, the numerator of which shall equal (i) the Internal Enterprise
Value as of the Vesting Date minus (ii) the Threshold Internal Enterprise
Value, and the denominator of which shall equal (a) the Target Internal
Enterprise Value minus (b) the Threshold Internal Enterprise Value.  The Cash Award shall be calculated according
to the following formula: (Performance Percentage) x (40% of the number of RSA
Shares) x (May 1, 2015 closing price of the


 


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Common Stock of the Company).  Except as otherwise provided herein, Grantee
must remain an employee of the Company between the Effective Date and the
Vesting Date in order to receive all or any portion of the Cash Award.  If the level of performance achieved is less
than or equal to the Threshold Internal Enterprise Value, then no Cash Award
shall be payable hereunder.


 


Unless the Award is properly deferred under the terms
of the Plan, the Award shall be paid to the Grantee within 21/2 months after the end of the Company’s or the
Grantee’s taxable year (whichever ends later) in which the Grantee became
entitled to the Award payment.  The Company may withhold from any payment that it is required to make
under this Award Agreement amounts sufficient to satisfy applicable withholding
requirements under any federal, state or local law.


 


The Cash Award is intended to be
a “162(m) Award” within the meaning of Section 5 of the Plan.


 


2.             Deferrals.  The Grantee may defer receipt of his Award,
subject to the deferral rules under the Plan and applicable law.


 


3.             Payment
Proration.  Notwithstanding
the provisions of Section 1, the Cash Award shall be earned pro rata,  in an amount determined according to the
calculation set forth below, if the Grantee’s employment with the Company and
all of its Subsidiaries and Affiliates is terminated prior to the Vesting Date
due to: (i) retirement on or after his sixty-fifth birthday;
(ii) retirement on or after his fifty-fifth birthday with consent of the
Company; (iii) retirement at any age on account of total and permanent
disability as determined by the Company; or (iv) death.  In such event, the Cash Award, if any, will
be paid within 21/2 months of May 2,
2015 and the Cash Award shall be based on the Internal Enterprise Value as of
the Vesting Date calculated according to the following formula: (Performance
Percentage) x (40% of the number of RSA Shares) x (May 1, 2015 closing
price of the Common Stock of the Company) x (a fraction, the numerator of which
shall be the number of months elapsed between the date of this Award Agreement
and the date of termination of employment (rounded up to the nearest whole
month) and the denominator of which shall be fifty-four and a half (54.5)).


 


4.             Change
of Control.  Notwithstanding the
continued employment requirements of  Section 1
or the provisions set forth in Section 3, the payment of the Cash Award
shall be accelerated, and the Cash Award amount will be determined according to
the calculation set forth below, immediately following a Change of Control,
subject to (i) the Grantee’s continued employment with the Company or a
Subsidiary or Affiliate through the date immediately preceding the effective
date of such Change of Control; or (ii) the Grantee’s termination of
employment by the Company without “Good Cause” or Grantee’s voluntary
termination of such employment with “Good Reason” during the period beginning
on the date an agreement is entered into by the Company with respect to a
merger or other business combination of the Company, which would constitute a
Change of Control, and the effective time of such merger or other business
combination of the Company.  In such
event, Grantee shall be entitled to the Cash Award based on the Company’s
external enterprise value as of the date of the Change of Control (the “External
Enterprise Value”).  For this purpose,
External Enterprise Value shall equal the fair market value of the Company as
determined by the bona fide offer for the purchase of the Company’s Common
Stock outstanding (including any stock equivalents convertible to common stock)
causing the Change of Control (the “Change of Control Price Per Share”) and the
terms “Good Cause” and “Good Reason” shall have the meanings set forth in the
Change in Control Agreement dated as of
                      
between the Company and the Grantee, as the same may be amended from time to
time (the “Change of Control Agreement”). To the extent required to qualify as a “162(m) Award” within the meaning of Section 5
of the Plan, the Compensation Committee shall have the authority to (i) require
the Grantee to include an additional amount in his/her income to reasonably
reflect the time value of money from which he/she is benefitting due to this
accelerated payment or to (ii) discount the Cash Award paid to Grantee in
order to reasonably reflect the time value of money.   In the event of a Change of Control, the
threshold and target


 


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levels of performance (the “Threshold External
Enterprise Value” and the “Target External Enterprise Value,” respectively) are
set forth on Exhibit C, attached hereto.  The amount of the Cash Award, if any, payable
upon a Change of Control shall be based upon the performance percentage as
calculated pursuant to Exhibit D hereto (the “Change of Control
Performance Percentage”), the RSA shares and the per share consideration paid
in connection with the Change of Control. 
Pursuant to Exhibit D, the Change of Control Performance Percentage
shall equal a fraction, the numerator of which shall equal (i) the
External Enterprise Value minus (ii) the Threshold External Enterprise
Value, and the denominator of which shall equal (a) the Target External
Enterprise Value minus (b) the Threshold External Enterprise Value.  In such event, the Cash Award shall be
calculated according to the following formula: (Change of Control Performance
Percentage) x (40% of the number of RSA Shares) x (Change of Control Price Per
Share). If the level of performance achieved is less than or equal to the
Threshold External Enterprise Value, then no payment shall be made
hereunder.  Any portion of this Award
that has not been vested upon a Change of Control shall be immediately
forfeited.


 


5.             Construction.  This Award Agreement is subject to the terms
of the Plan and shall be construed in accordance therewith.  All capitalized and undefined terms herein
are subject to the definitions contained in the Plan.  The construction and operation of this Award
Agreement are governed by the laws of the State of Illinois without regard to
any conflicts or choice of law rules or principles that might otherwise
refer construction or interpretation of this Award Agreement to the substantive
law of another jurisdiction, and any litigation arising out of this Award
Agreement shall be brought in the Circuit Court of the State of Illinois or the
United States District Court for the Eastern Division of the Northern District
of Illinois.


 


7.             Funding.  Cash payments under this Award Agreement
shall constitute general obligations of the Company. Grantee shall have only an
unsecured right to payment thereof out of the general assets of the Company.


 


8.             Severability.  In the event that any provision or portion of
this Award Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Award Agreement shall be unaffected
thereby and shall remain in full force and effect.


 


9.             Dispute
Resolution.  The parties initially
shall attempt to resolve by direct negotiation any dispute, controversy or
claim arising out of or relating to this Award Agreement or its breach or
interpretation (each, a “Dispute”).  For
purposes of this negotiation, the Company shall be represented by one or more
of its independent directors appointed by the Board of Directors. If the
parties are unable to resolve the Dispute by direct negotiation within 30 days
after written notice by one party to the other of the Dispute, the Dispute
shall be settled by submission by either party of the Dispute to binding
arbitration in Chicago, Illinois (unless the parties agree in writing to a
different location), before a single arbitrator in accordance with the American
Arbitration Association’s National Rules for the Resolution of Employment
Disputes then in effect.  The arbitrator
will be an attorney licensed to practice law in the State of Illinois.  The decision and award made by the arbitrator shall be final, binding
and conclusive on all parties hereto for all purposes, and judgment may be
entered thereon in any court having jurisdiction thereof.  Except as set forth below, each party shall
pay:  the fees of his or its attorneys;
the expenses of his or its witnesses; and all other expenses connected with
presenting his or its case.  Except as
set forth below, the costs of the arbitration, including the cost of any record
or transcripts of the arbitration hearing, administrative fees, the fees of the
arbitrator, and all other fees and costs shall be borne equally by the
parties.  In the event of a Dispute
following or in connection with a Change of Control, the Company shall pay the
fees of the arbitrator as well as the cost of any record or transcripts of the
arbitration hearing and other administrative fees and costs.  In all Disputes, the arbitrator will have
discretion to make an award of fees, costs and expenses to the prevailing
party.


 


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10.           Counterparts.  This Award Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.


 


11.           Entire
Award Agreement; Clawback Policy. 
This Award Agreement supersedes and cancels all prior written or oral
agreements and understandings relating to the terms of this Award
Agreement.  This Award Agreement and the
Cash Award hereunder are subject to any Company Clawback Policy in effect as of
the date of this Award Agreement or as subsequently amended, modified or
replaced and the terms of the Change in Control Agreement, as amended.


 


12.           Plan
Controlling.  Grantee hereby
acknowledges receipt of a true copy of the Plan and has read the Plan and fully
understands its content.  In the event of
any conflict between the terms of this Award Agreement and the terms of the
Plan, the terms of the Plan shall control.


 


13.           Section 409A
Compliance.  It is the intention of
the Company and the Grantee that the Cash Award and other benefits awarded
under this Award Agreement shall be exempt from the requirements of Section 409A
of the Code and its implementing regulations (“Section 409A”) and this
Award Agreement shall be interpreted in a manner consistent with this
intention.  In the event that the Company
or the Grantee reasonably determines that any award under this Award Agreement
may be subject to Section 409A, the Company and Grantee shall work
together to adopt such amendments to this Award Agreement or adopt other
policies or procedures (including amendments, policies and procedures with
retroactive effective, to the extent allowed under applicable laws), or take
any other commercially reasonable actions necessary or appropriate to cause the
award under this Award Agreement to (i) be exempt from Section 409A,
or (ii) otherwise comply with the requirements of Section 409A.


 


14.           No
Retention Rights.  Nothing herein
contained shall confer on the Grantee any right with respect to continuation of
employment or services by the Company or its Subsidiaries or Affiliates, or
interfere with the right of the Company or its Subsidiaries or Affiliates to
terminate at any time the employment or service of the Grantee.


 


[Signature Page to Follow]


 


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IN WITNESS WHEREOF, the Company by one of its duly
authorized officers has executed this Award Agreement as of the day and year
first above written.


 


 


METHODE ELECTRONICS, INC.


 


	
  By:

  	
   

  	
   

  
	
   

  	
  Paul G. Shelton

  	
   

  
	
  Its:

  	
  Chairman,
  Compensation Committee

  	
   

  



 


Please indicate your acceptance of the terms and
conditions of this Award Agreement by signing in the space provided below and
returning a signed copy of this Award Agreement to the Company.  IF A FULLY EXECUTED COPY OF THIS AWARD
AGREEMENT HAS NOT BEEN RECEIVED BY THE COMPANY BY NOVEMBER 30, 2010, THE AWARD
UNDER THIS AWARD AGREEMENT SHALL BE CANCELLED.


 


BY SIGNING BELOW, YOU ACKNOWLEDGE AND AGREE THAT YOU
HAVE RECEIVED A COPY OF THE PLAN AND ARE FAMILIAR WITH THE TERMS AND PROVISIONS
THEREOF, INCLUDING THE TERMS AND PROVISIONS OF THIS AWARD AGREEMENT.  YOU HAVE REVIEWED THE PLAN AND THIS AWARD
AGREEMENT IN THEIR ENTIRETY, HAVE HAD AN OPPORTUNITY TO OBTAIN THE ADVICE OF
COUNSEL PRIOR TO EXECUTING THIS AWARD AGREEMENT AND FULLY UNDERSTAND ALL
PROVISIONS OF THIS AWARD AGREEMENT. 
FINALLY, YOU HEREBY AGREE TO ACCEPT AS BINDING, CONCLUSIVE AND FINAL ALL
DECISIONS OR INTERPRETATIONS OF THE ADMINISTRATOR UPON ANY QUESTIONS ARISING
UNDER THE PLAN OR THIS AWARD AGREEMENT.


 


The undersigned hereby accepts, and agrees to, all terms
and provisions of this Award Agreement and the Plan as they pertain hereto.


 


 


GRANTEE


 


	
   

  	
   

  
	
  [                                      ]

  	
   

  



 


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