Exhibit 10.1 to Lenox Group Inc. Form 8-K dated September 28, 2007








EXHIBIT 10.1


 


AGREEMENT FOR PERFORMANCE SHARES


UNDER THE LENOX GROUP INC. (“LGI” or “Company”) 2004 STOCK INCENTIVE PLAN


 





	
             
 	
            Grantee:________________  
 	
            Performance Cycle: ___________________________
 









	
             
 	
            Number of Performance Shares Granted: ________________  
 	
            (FY’s ’XX, ‘XX and ’XX)
 








	
             
 	
            Grant Date: ________________  
 	
             
 






 


Target Number of Performance Shares that may be earned if Target Performance is achieved: 100% of the granted number as set forth above; or


 


Threshold Number of Performance Shares that may be earned if Threshold Performance is achieved: 75% up to 100% of the granted number as set forth above; or


 


Minimum Number of Performance Shares that may be earned if Minimum Performance is achieved:  50% up to 75% of the granted number as set forth above.


 


Target Performance:  Must achieve three of the following four performance metrics:





	
             
 	
            1.
 	
            Achieve Fiscal Year [1] operating income of $ XXXX  million.
 









	
             
 	
            2.
 	
            Achieve Fiscal Year [2] operating income of $ XXXX  million.
 









	
             
 	
            3.
 	
            Achieve Fiscal Year [3] operating income of $ XXXX  million.
 









	
             
 	
            4.
 	
            Achieve cumulative 3-year operating income of $ XXXX  million over the Performance Cycle of Fiscals [1], [2] and [3].
 






 


Threshold Performance:  Must achieve a cumulative 3-year operating income of $ XXXX  million  over the performance cycle of Fiscals [1], [2] and [3] to earn 75% of the Performance Shares, and for each $ XXXX million of 3-year cumulative operating income above $ XXXX  million, Grantee will earn an additional 1%  of the Performance Shares up to 100%, provided such cumulative operating income is sufficient to maintain compliance with the financial covenants in the Company’s loan agreements, as may be amended or waived from time to time.


 


Minimum Performance:  Must achieve a cumulative 3-year operating income of $ XXXX  million over   the performance cycle of Fiscals [1], [2] and [3] to earn 50% of the Performance Shares, and for each $ XXXX million of 3-year cumulative operating income above $ XXXX  million, Grantee will earn an additional 1% of the Performance Shares up to 75%, provided such cumulative operating income is sufficient to maintain compliance with the financial covenants in the Company’s loan agreements, as may be amended or waived from time to time.


 


1.      General.  Pursuant
to Section 8 of the Company’s 2004 Stock Incentive Plan (the “Plan”) and subject to the terms of this
Agreement and the Plan, the Company hereby grants to the Grantee an Other Stock-Based Award (the “Grant”) in the form of
shares of Common Stock subject to the terms, conditions and limitations provided herein and in the Plan (each such share of Common
Stock being a “Performance Share”). The number of Performance Shares granted and which may be ultimately vested and
earned is subject to adjustment for recapitalizations and other events as provided in Section 10 of the Plan. Except as
otherwise defined herein, capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan. For
purposes of this Agreement, (a) the term “person” shall mean an individual, a corporation, a partnership, an
association, a trust, a sole proprietorship, a limited liability company, or any other entity or organization, including a
government or governmental agency, instrumentality, authority, commission or court, (b) the term “Affiliate” of the
Company shall mean any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the Company and (c) the term “control” shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of any person, whether through the
ownership of equity interests, by contract or otherwise.



















	
            2.
 	
            Vesting of Performance Shares.
 





 





	
             
 	
            2.1
 	
            Vesting and Earning.  
 









	
             
 	
            (a)
 	
            Subject to the provisions of this Agreement, the Plan and the specifications for the Grant adopted by the Committee (e.g., vesting percentage formula, and target, threshold and minimum number of Performance Shares that may be earned by the Grantee under this Grant), as of the last day of the Performance Cycle shown above (the “Performance Cycle”),  the Grantee may earn and become vested in a specific percentage of the Performance Shares covered by the Grant depending upon the extent to which operating income as shown above is met as of the end of the Performance Cycle. The determination as to what extent such performance objective is met shall be made with reference to the Company’s fiscal year-end “operating income” (as defined below) for each of the fiscal years included in the Performance Cycle.
 






 





	
             
 	
            (b)
 	
            The number of Performance Shares actually earned and vested under this Grant shall be as follows:
 









	
             
 	
            o
 	
            If the Target Performance is achieved, then the Target Number of Performance Shares shall have been earned by and vested in the Grantee.
 









	
             
 	
            o
 	
            If the Threshold Performance is achieved, then the Threshold Number of Performance Shares shall have been earned by and vested in the Grantee as set forth above.
 









	
             
 	
            o
 	
            If the Minimum Performance is achieved, then the Minimum Number of Performance Shares shall have been earned by and vested in the Grantee as set forth above.
 









	
             
 	
            o
 	
            If cumulative 3-year operating income is below the Minimum Performance, then none of the Performance Shares shall have been earned by or vested in the Grantee.
 






 





	
             
 	
            (c)
 	
            For these purposes, the term “operating income” shall mean operating income at fiscal year-end as reported in the Company’s audited consolidated financial statements (subject to any adjustments for transactions that would be excluded from consolidated EBITDA under the Company’s loan agreements to the extent they are included in reported operating income). Since acquisitions are part of the Company’s business strategy, for these purposes any acquisition’s operating income is included in the determination of operating income for the performance measures set forth above, only if the acquisition transaction is consummated prior to the beginning of the last fiscal year of the Performance Cycle and then, if such test is met, only to the extent that such acquisition generated operating income during the subsequent fiscal year(s) covered
by the Performance Cycle.  
 






 





	
             
 	
            2.2
 	
            Forfeiture of Unearned Grant. As soon as practicable following the determination of earning and vesting made in accordance with Section 2.1 hereof, all Performance Shares not so determined to have been earned by and vested in the Grantee shall be forfeited and transferred back to the Company.  
 






 





	
             
 	
            2.3
 	
            Effect of Change in Control.  Notwithstanding anything contained in this Agreement to the contrary and unless otherwise provided in the Plan or another agreement between the Company and the Grantee, in the event of a Change in Control all Performance Shares shall vest in the Grantee on the following basis and subject to the following conditions:
 






 





	
             
 	
            (i)
 	
            If a Change in Control occurs prior to the last day of the Performance Cycle, the Grantee shall become vested in a number of Performance Shares hereunder determined as follows: 
 






 





	
             
 	
            A.
 	
            First, the Company shall be deemed to have achieved the Target Performance as set forth above. 
 






 





	
             
 	
            B.
 	
            Next, the number of Performance Shares earned as a result Clause (A) of this Paragraph (i) is multiplied by a fraction, the numerator of which is the number of months of the Grantee's continuous employment within the Performance Cycle prior to the Change in Control and the denominator of which is the number of months within the entire Performance Cycle. 
 






 





	
             
 	
            (ii)
 	
            Distribution of the Grantee's vested Performance Shares as determined in Paragraph (i) hereof shall be made as soon as practicable after the first occurrence of a Change in Control. Upon the making of any such distribution, this Grant and the underlying Performance Shares shall be deemed canceled and of no further force and effect. 
 






 


2



















	
            3.
 	
            Certain Restrictions.
 





 





	
             
 	
            3.1
 	
            Non-transferability.  Until such time (the “Lapse Date”) as the Grantee is determined in accordance with Section 2. 1 or Section 2.3 hereof to have earned and become vested in any Performance Shares covered by this Grant, the Grantee shall not be entitled to transfer, sell, pledge, hypothecate or assign any Performance Shares (collectively, the "Transfer Restrictions").  This Grant and the underlying Performance Shares shall not be transferable by the Grantee otherwise than by will or the laws of descent and distribution, or to his or her guardian, executor, administrator or other legal representative (each a "Legal Representative") (all references herein to "Grantee" being deemed to include the Grantee's Legal Representative, if any, unless the context otherwise requires). The terms of such Grant shall be final, binding and
conclusive upon the beneficiaries, executors, administrators, heirs and successors of the Grantee. The Grantee may designate in writing on forms prescribed by and filed with the Company a beneficiary or beneficiaries to receive any benefits payable after his or her death, and may at any time amend or revoke such designation. If no beneficiary designation is in effect at the time of the Grantee's death, payments under this Agreement, if any, shall be made to his or her Legal Representative.  
 






 





	
             
 	
            3.2
 	
            Employment Termination.  Except as may be agreed between the Committee and the Grantee or otherwise provided in the Plan or another agreement between the Company and the Grantee, if the Grantee shall no longer be employed by the Company or any of its Subsidiaries for any reason whatsoever prior to the end of the Performance Cycle ("Terminated" or a "Termination"), the Grantee shall forfeit any right or entitlement to or in the Grant and the underlying Performance Shares; provided, however, that if the Termination occurs six (6) months or more after the date this Grant was made but prior to the last day of the Performance Cycle due to the occurrence of the Grantee's death, approved retirement, termination without cause, other approved separation from employment, or disability, the Grantee
may become vested in a number of Performance Shares hereunder, the number being determined as follows: A. First, the number of Performance Shares which would have vested in the Grantee as of the last day of the Performance Cycle had the Grantee remained employed throughout such Performance Cycle shall be calculated upon completion of the Performance Cycle in accordance with Section 2.1 hereof. B. Next, the result obtained in Clause (A) of this Section 3.2 shall be multiplied by a fraction, the numerator of which is the number of months of such Grantee's continuous employment within the Performance Cycle prior to Termination, and the denominator of which is the number of months within the entire Performance Cycle.  
 






 





	
             
 	
            3.3
 	
            Shareholder Rights. Except as otherwise provided in this Agreement, the Grantee shall be entitled, at all times on and after the Grant Date, to exercise all rights of a shareholder with respect to the Performance Shares (whether or not the Transfer Restrictions thereon shall have lapsed), other than with respect to those Performance Shares which have been forfeited pursuant to Section 2.2 hereof, including the right to vote the Performance Shares and the right, subject to Section 3.4 hereof, to receive dividends thereon. 
 






 





	
             
 	
            3.4
 	
            Dividends. All dividends declared and paid by the Company on Performance Shares shall be deferred in their distribution to the Grantee until the lapsing of the Transfer Restrictions pursuant to Sections 2.1, 2.3 and 3.1.  The deferred dividends shall be held by the Company for the account of the Grantee until the Lapse Date, at which time the dividends, with no interest thereon, shall be paid to the Grantee or her/his estate, as the case may be.  In the event of any forfeiture of the Performance Shares pursuant to Section 2.2, any deferred dividends pertaining to such forfeited shares shall also be forfeited to the Company.
 






 


4.      Specific Performance; Governing Law.  The parties hereto acknowledge that there will be no adequate remedy at law for a violation of any of the provisions of this Agreement and that, in addition to any other remedies which may be available, all of the provisions of this Agreement shall be specifically enforceable in accordance with their respective terms. This Agreement shall be interpreted under the laws of the State of Delaware (except with respect to matters of employment law, which shall be interpreted under the laws of the State of Minnesota), entirely independent of the forum in which the Agreement or any part of it may come up for construction, interpretation or enforcement.


 


3
















5.      Withholding.  Upon the vesting of any Performance Shares to the Grantee hereunder, the Grantee shall remit to the Company the full amount of any applicable Withholding Taxes.  The Company shall have the right to deduct from any distribution of cash to the Grantee any amount necessary in satisfaction of any applicable Withholding Taxes. The Committee may permit a Grantee to elect to satisfy Withholding Taxes relating to the earning and vesting of Performance Shares by having the Company withhold a sufficient number of Common Shares otherwise payable in respect of the earned and vested Performance Shares. Any Common Shares so withheld by the Company shall be valued at their per share "fair market value," which shall mean for the purposes of this Section the closing composite transactions listing on the date the Witholding Tax is
determined (or such other meaning as the Committee may hereafter adopt). 


 


6.      Acknowledgment.  The Grantee hereby acknowledges prior receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof as the same may be amended from time to time.  The Grantee hereby acknowledges that s/he has reviewed the Plan and this Agreement and understands his or her rights and obligations thereunder and hereunder.  The Grantee also acknowledges that s/he has been provided with such information concerning the Company, the Plan and this Agreement as s/he and his or her advisors have requested.


 





	
            7.
 	
            Share Issuance, Etc.
 






 


7.1    Certificates (or an “electronic “book entry” on the books of the Company’s stock transfer agent) representing the Performance Shares shall be issued and held by the Company (or its stock transfer     agent) in escrow (together with any stock transfer powers which the Company may request of Grantee) and shall remain in the custody of the Company (or its stock transfer agent) until (i) their delivery to the Grantee or his/her estate as set forth in Section 7.2 hereof, or (ii) their forfeiture and transfer to the Company as set forth in Section 2.2 hereof. The appointment of an independent escrow agent shall not be required.


 


7.2    (a)  Subject to paragraph (b) of this Section 7.2, certificates (or an electronic “book entry”) representing those Performance Shares in respect of which the Transfer Restrictions have lapsed pursuant to Section 3.1 hereof shall be delivered to the Grantee as soon as practicable following the Lapse Date, subject to the application of Section 5 above.  


 


         (b)  Certificates (or an electronic “book entry”) representing those Performance Shares in respect of which the Transfer Restrictions have lapsed pursuant to Section 3.1(b) upon the Grantee's death       shall be delivered to the executors or administrators of the Grantee's estate as soon as practicable        following the Lapse Date and the Company's receipt of notification of the Grantee's death, accompanied by an official death certificate, subject to the application of Section 5 above. 


 


         (c)  The Grantee, or the Legal Representative, as the case may be, may receive, hold, sell or otherwise dispose of those Performance Shares delivered to him or her pursuant to paragraphs (a) or (b) of this Section 7.2 free and clear of the Transfer Restrictions, but subject to compliance with all federal and state securities laws.


 


7.3    (a)  Each stock certificate issued pursuant to Section 7.1 shall bear a legend in substantially the following form: 


 


This certificate and the shares of stock represented hereby are subject to the terms and conditions applicable to an Other Share-Based Award contained in the 2004 Stock Incentive Plan (the "Plan") and a Performance Share Agreement (the "Agreement") between the Company and the registered owner of the shares represented hereby. Release from such terms and conditions shall be made only in accordance with the provisions of the Plan(s) and the Agreement, copies of which are on file in the office of the Secretary of the Company.


 


4
















(b)   As soon as practicable following a Lapse Date, the Company shall issue a new certificate (or electronic “book entry”) for shares of the Restricted Stock which have become non-forfeitable in relation to such Lapse Date (subject to section 5 above), which new certificate (or electronic “book entry”) shall not bear the legend set forth in paragraph (a) of this Section 7.3 and shall be delivered in accordance with Section 7.2 hereof.


 


8.        Adjustments Upon Change in Capitalization.  If, by operation of Section 10 of the Plan, the Grantee shall be entitled to new, additional or different shares of stock or securities of the Company or any successor corporation or entity or other property, such new, additional or different shares or other property shall thereupon be subject to all of the conditions and restrictions which were applicable to the Performance Shares immediately prior to the event and/or transaction that gave rise to the operation of Section 10 of the Plan


 





	
            9.
 	
            Prohibition Against Certain Activities.
 





 





	
             
 	
            9.1
 	
            Restricted Activities. The Grantee understands that the Company is granting to the Grantee the Performance Shares to reward the Grantee for the Grantee's future efforts and loyalty to the Company and its Affiliates by giving the Grantee the opportunity to participate in the equity of the Company.  Accordingly, and in order to better protect the goodwill of the Company and thereby ensure the long-term success of the business, the Grantee agrees that: (a) s/he will not at any time during his/her employment with the Company or any Affiliate, or after any Termination, directly or indirectly disclose or furnish to any other person or use for his/her own or any other person's account any confidential or proprietary knowledge or any other information which is not a matter of public knowledge obtained during the entire course of his/her
employment with, or other performance of services for, the Company or any Affiliate or any predecessor of any of the foregoing, no matter from where or in what manner the Grantee may have acquired such knowledge or information, and s/he shall retain all such knowledge and information in trust for the benefit of the Company, its Affiliates and the successors and assigns of any of them; (b) if s/he is Terminated, s/he will not for two years following the Termination directly or indirectly solicit for employment, including without limitation recommending to any subsequent employer the solicitation for employment of, any person who at the time of the solicitation is employed by the Company or any Affiliate  (a "“LGI” Employee") (it being understood that, if the Grantee becomes affiliated with another person (the "Successor") and the Successor solicits for employment a “LGI” Employee, it shall not constitute a solicitation hereunder if the Grantee does not solicit,
recommend to the Successor, or otherwise bring to the attention of the Successor, the “LGI” Employee); and (c) s/he will not at any time during his/her employment or after any Termination publish any statement or make any statement (under circumstances reasonably likely to become public or that s/he might reasonably expect to become public) critical of the Company or any Affiliate, or in any way adversely affecting or otherwise maligning the business or reputation of the Company or any of its Affiliates or any of their respective officers, directors or employees (any activity described in clause (a), (b) or (c) of this sentence being herein referred to as a "Prohibited Activity").  In addition, the Grantee agrees that s/he will not at any time during his/her employment with the Company or any Affiliate and the twelve (12) months thereafter (including  any period following Termination during or in respect of which s/he is receiving any severance payment) engage in any
Competitive Activity (as defined below) anywhere in the world (including, without limitation, anywhere in the United States of America, the United Kingdom, Hong Kong, China or Taiwan).  
 






 


The term “Competitive Activity” shall mean engaging in any of the following activities:  (a) directly or indirectly through one or more intermediaries, controlling any Competitor (as defined below) or owning any equity or debt interests in any Competitor (other than equity or debt interests which are publicly traded and do not exceed 2% of the particular class of interests outstanding); (b) directly or indirectly soliciting, diverting, taking away, appropriating or otherwise interfering with any of the employees or customers of the Company or any Affiliate; or (c) employment by (including serving as an officer or director of), or providing consulting or other services to, any Competitor.  The term “Competitor” means any person who derives  significant revenues, income or reputational gain from producing, selling, designing, dealing or otherwise
conducting commercial activity in, with or pertaining to, tabletop products, collectibles, miniature decorative or collectible buildings or coordinated “village” accessories, figurines, jewelry, watches or general decorative giftware products.


 


5


















	
             
 	
            9.2
 	
            Remedies.
 





 





	
             
 	
            9.2.1
 	
            By acceptance of the Performance Shares, the Grantee acknowledges that if the Grantee were, without the prior written consent of Company, to violate, or threaten to violate, any of the provisions of Section 9.1, the Company would be entitled to a temporary restraining order and injunctive relief and other appropriate relief to prevent the Grantee from doing so, without the necessity of posting bond or proving irreparable harm such as being conclusively admitted by the Grantee.  The Grantee acknowledges that the harm caused to the Company by the breach or anticipated breach of Section 9.1 is by its nature irreparable because, among other things, it is not readily susceptible of proof as to the monetary harm that would ensue.  The Grantee further acknowledges that the restrictions set forth in Section 9.1 are reasonable in scope and duration and are necessary to
protect the Company’s legitimate business interests, given the nature of the business of the Company.  The Grantee agrees that the provisions of Section 9.1 hereof, and/or the issuance of an injunction restraining the Grantee from breaching such provisions of Section 9.1 will not pose an unreasonable restriction on Grantee’s ability to earn a living, pursue an occupation or obtain employment or other work following the Grantee’s termination of employment with the Company or any of its Affiliates.  The Grantee consents that any  interim or final equitable relief entered by a court of competent jurisdiction shall, at the request of the Company, be entered on consent and enforced by any court having jurisdiction over the Grantee, without prejudice to any rights either party may have to appeal from the proceedings which resulted in any grant of such relief.
 






 





	
             
 	
            9.2.2
 	
            If any of the provisions contained in Section 9.1 shall for any reason, whether by application of existing law or law which may develop after the Grantee’s acceptance of the Performance Shares, be determined by a court of competent jurisdiction to be overly broad as to scope of activity, duration, or territory, the Grantee agrees to join the Company in requesting such court to construe such provision by limiting or reducing it so as to be enforceable to the extent compatible with then applicable law.
 






 





	
             
 	
            9.2.3
 	
            In the event the Grantee violates any provision of Section 9.1 or is charged or convicted of a crime against the Company or any Affiliate, then, in addition to other remedies available to the Company provided herein, and any other remedies provided by operation of law, the Company shall be entitled, in its sole discretion and irrespective of whether a Lapse Date has occurred, to require upon written demand the forfeiture of (and the Grantee shall be obligated upon such written demand to repay) the Performance Shares to the Company (including any net cash proceeds from the sale of any Performance Shares by the Grantee). 
 






 


LENOX GROUP INC.


 


 





	
            By:__________________  
 	
            Date: ________  
 	
            Grantee:________________  
 	
            Date:_______
 





 


 











6