Document:

exv10w3

 

Exhibit 10.3

METHODE ELECTRONICS, INC. 

2007 STOCK PLAN

PERFORMANCE BASED RSA

FORM AWARD AGREEMENT

     This restricted stock award agreement (the “Award Agreement”), effective as of September 13,
2007 (the “Award Date”), is entered into by and between Methode Electronics, Inc., a Delaware
corporation (the “Company”) and                      (the “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 deliver to Grantee restricted stock of the Company
under the Methode Electronics, Inc. 2007 Stock Plan (the “Plan”) on the terms and conditions set
forth herein.

     1. Grant. The Company hereby grants to Grantee a total of [                    ] shares of
Restricted Stock (the “Restricted Shares”).

     2. Vesting. The Restricted Shares shall vest as follows:

	 	(a)	 	Vesting Date. Except as otherwise provided in this section, the
determination as to the number of Restricted Shares which shall vest hereunder shall be
made as of May 1, 2010 (the “Vesting Date”).
	 
	 	(b)	 	Amount of Restricted Shares that Vest. The vesting of the Restricted
Shares will be based on return on invested capital (“ROIC”) achieved during the
three-year period ending on the Vesting Date and net sales growth by the Company. In
calculating net sales growth, the net sales in fiscal 2007 (the “Base Year”) shall be
compared to the net sales in the fiscal year ending on the Vesting Date (the “Final
Year”). Exhibit A sets forth a table of vesting percentages which vary based
upon the performance criteria. Grantee shall vest in the percentage of Restricted
Shares that corresponds to the performance achieved as of the Vesting Date. The
percentage of Restricted Shares that vests shall be determined in the absolute
discretion of the Committee in accordance with the terms of this Award Agreement.
	 
	 	(c)	 	Termination of Employment Prior to the Vesting Date. Notwithstanding
the provisions of this section, the Restricted Shares granted hereunder shall vest, 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 Grantee’s sixty-fifth
birthday; (ii) retirement on or after Grantee’s 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, Grantee
shall vest in the percentage of Restricted Shares that, extrapolated from the net
sales growth and ROIC achieved in the four most recently completed fiscal quarters,
would have vested on the Vesting Date, multiplied by the percentage set forth in
Exhibit B corresponding to the number of fiscal months elapsed since April
28, 2007 (rounded up).
	 
	 	(d)	 	Change of Control. Notwithstanding the provisions of this section, the
Restricted Shares granted hereunder shall vest, in an amount determined according to
the calculation set forth below, immediately following a Change of Control. In such
event, Grantee shall vest in the percentage of Restricted Shares that, extrapolated
from the net sales growth and ROIC achieved in the four most recently completed fiscal
quarters, would have vested on the Vesting Date, multiplied by the percentage set forth
in Exhibit B corresponding to the number of fiscal months elapsed since April
28, 2007 (rounded up).

     Grantee agrees, as a condition of this Award, to make acceptable arrangements to pay any
withholding or other taxes that may be due as a result of the vesting of the Restricted Shares
acquired under this Award. In the event that the Company determines that any federal, state, local
or foreign tax or withholding payment is required relating to the vesting of shares arising from
this Award, the Company shall have the right to require such payments from Grantee, or withhold
such amounts from other payments due Grantee from the Company or any Subsidiary or Affiliate.

     3. Forfeiture and Set-Off.

	 	(a)	 	Forfeiture if the Grantee Engages in Certain Activities. If at any
time the Grantee engages in any activity adverse, contrary or harmful to the interests
of the Company, including, but not limited to: (i) conduct related to the Grantee’s
employment for which either criminal or civil penalties against the Grantee may be
sought, (ii) while employed by the Company or any Subsidiary or Affiliate, serving as a
consultant, advisor or in any other capacity to an entity that is, or proposes to be,
in competition with or acting against the interests of the Company, (iii) employing or
recruiting any present, former or future employee of the Company, whether individually
or on behalf of another person or entity, that is, or proposes to be, in competition
with or acting against the interests of the Company, (iv) disclosing or misusing any
confidential information or material concerning the Company, or (v) participating in a
hostile takeover attempt of the Company, then (1) the unvested Restricted Shares shall
be forfeited to the Company effective as of the date on which the Grantee entered into
such activity, unless terminated sooner by operation of another term or condition of
this Award Agreement or the Plan, or (2) if elected by the Company, the Grantee shall

 

 

	 	 	 	immediately pay to the Company the Fair Market Value of the unvested Restricted
Shares.
	 
	 	(b)	 	Right of Set-off. If the Grantee owes the Company any amount by virtue
of Section 3(a) above, then the Company (or any Subsidiary or Affiliate) may recover
such amount by setting it off from any amounts the Company (or any Subsidiary or
Affiliate) owes or may owe the Grantee from time to time. By accepting these
Restricted Shares and signing this Award Agreement in the space provided below, the
Grantee consents to a deduction of any amount the Grantee may owe the Company by virtue
of Section 3(a) above from any amounts the Company (or any Subsidiary or Affiliate)
owes or may owe the Grantee from time to time (including amounts owed to the Grantee as
wages or other compensation, fringe benefits, or vacation pay, as well as any other
amounts owed to the Grantee). Whether or not the Company elects to make any set-off in
whole or in part, if the Company does not recover by means of set-off the full amount
the Grantee owes it, calculated as set forth above, the Grantee agrees to pay
immediately the unpaid balance to the Company.
	 
	 	(c)	 	Committee Discretion. The Committee may release the Grantee from the
obligations under Section 3(a) above if the Committee determines in its sole discretion
that such action is in the best interest of the Company.

     4. Adjustments for Acquisitions or Dispositions. In the event of any acquisition of
one or more businesses during the Base Year, the net sales of the acquired business(es) for such
full fiscal year (including pre-acquisition sales) will be included in the Base Year net sales. In
the event of any disposition (or related dispositions as determined by the board of directors) with
Base Year net sales in the aggregate in excess of Fifty Million Dollars ($50,000,000) (a “Large
Disposition”), the net sales of such business(es) will be deducted from the Base Year net sales and
the Final Year net sales, if any. For all acquisitions and all dispositions other than a Large
Disposition, the net sales of such businesses will be offset against each other. In such
calculation, the net sales for the twelve months prior to the closing will be used for dispositions
and the net sales for the full fiscal year of the transaction (including pre-acquisition sales)
will be used for acquisitions. After offsetting such net sales, if such amount is greater than
Fifty Million Dollars ($50,000,000), such amount will be deducted from the Final Year net sales.

     5. Restrictions. None of the Restricted Shares may be sold, transferred, pledged,
hypothecated or otherwise encumbered or disposed of until they have vested in accordance with the
terms of this Award Agreement. Any Restricted Shares that are not vested shall be forfeited to the
Company immediately upon termination of the Grantee’s employment with the Company and all of its
Subsidiaries and Affiliates or upon the expiration of this Award Agreement.

     6. Stock Certificates. Each stock certificate evidencing any Restricted Shares shall
contain such legends and stock transfer instructions or limitations as may be determined or
authorized by the Committee in its sole discretion; and the Company may, in its sole discretion,
retain custody of any such certificate throughout the period during which any restrictions are in

 

 

effect and require that the Grantee tender to the Company a stock power duly executed in blank
relating thereto as a condition to issuing any such certificate.

     7. Rights as Stockholder. The Grantee shall have no rights as a stockholder with
respect to any Restricted Shares until a stock certificate for the shares is issued in Grantee’s
name. Once any such stock certificate is issued in Grantee’s name, the Grantee shall be entitled
to all rights associated with ownership of the Restricted Shares, except that the Restricted Shares
will remain subject to the restrictions set forth in Section 5 hereof and if any additional shares
of Common Stock become issuable on the basis of such Restricted Shares (e.g., a stock dividend),
any such additional shares shall be subject to the same restrictions as the shares of Restricted
Shares to which they relate.

     8. 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.

     9. Amendment. This Award Agreement may be amended at any time by written agreement
between the Company and Grantee. Any such amendment shall be made pursuant to a resolution of the
Compensation Committee of the Company’s Board of Directors.

     10. 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.

     11. 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 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. 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. Other
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.

 

 

     12. No Retention Rights. Nothing herein contained shall confer on the Grantee any
right with respect to continuation of employment 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 of the Grantee.

     13. 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.

     14. Entire Agreement. This Award Agreement supersedes and cancels all prior written
or oral agreements and understandings relating to the terms of this Award Agreement.

	 	 	 	 	 	 	 	 	 	 	 
	GRANTEE	 	 	 	METHODE ELECTRONICS, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Paul G. Shelton	 	 
	[                                        ]	 	 	 	 	 	Its:
	 	Chairman, Compensation Committeeexv10w4

 

Exhibit 10.4

METHODE ELECTRONICS, INC.

2007 CASH INCENTIVE PLAN 

ANNUAL CASH BONUS

FORM AWARD AGREEMENT

     This Cash Incentive Award Agreement, effective as of September 13, 2007 (the “Agreement”), 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 incentive bonuses under the
Company’s 2007 Cash Incentive Plan (the “Plan”) on the terms and conditions set forth herein.

     1. Award. The Company will pay Grantee an annual performance-based cash bonus with a
target amount of [$________] (the “Target Amount”), provided certain performance goals are achieved
for the Company’s 2008 fiscal year. [For senior executives other than Duda and Koman: Seventy
percent (70%) of the Target Amount is payable based on fiscal-year 2008 earnings before net
interest and income taxes (“2008 EBIT”) and thirty percent (30%) of the Target Amount is payable
based on the achievement of certain management by objectives (“MBOs”) set forth on Exhibit
A attached hereto.]

[For Duda and Koman: If fiscal-year 2008 earnings before net interest and income taxes (“2008
EBIT”), based on the Company’s overall consolidated financial results, equals the budgeted earnings
before net interest and income taxes (“2008 Budgeted EBIT”), the Company will pay Grantee the
Target Amount. If 2008 EBIT exceeds 2008 Budgeted EBIT, the Company will pay Grantee the Target
Amount plus an amount equal to the following, up to a maximum of 40% of the Target Amount: (the
percentage excess of 2008 EBIT over 2008 Budgeted EBIT multiplied by two) multiplied by (the Target
Amount). If 2008 EBIT is less than 2008 Budgeted EBIT but is at least 85% of 2008 Budgeted EBIT,
the Company will pay Grantee the Target Amount minus an amount equal to the following: (the
percentage shortfall of 2008 EBIT compared to 2008 Budgeted EBIT) multiplied by (the Target
Amount). If 2008 EBIT is less than 85% of 2008 Budgeted EBIT, no amounts will be payable
hereunder.]

[For the other executives: If 2008 EBIT, based on the Company’s overall consolidated financial
results, equals the budgeted earnings before net interest and income taxes (“2008 Budgeted EBIT”),
the Company will pay Grantee seventy percent of the Target Amount (the “EBIT Award Amount”). If
2008 EBIT exceeds 2008 Budgeted EBIT, the Company will pay Grantee the EBIT Award Amount plus an
amount equal to the following, up to a maximum of 40% of the EBIT Award Amount: (the percentage
excess of 2008 EBIT over 2008 Budgeted EBIT multiplied by two) multiplied by (the EBIT Award
Amount). If 2008 EBIT is less than 2008 Budgeted EBIT but is at least 85% of 2008 Budgeted EBIT,
the Company will pay Grantee the EBIT Award Amount minus an amount equal to the following: (the
percentage shortfall of 2008 EBIT compared to 2008 Budgeted EBIT) multiplied by (the EBIT Award
Amount). If 2008 EBIT is less than 85% of 2008 Budgeted EBIT, no EBIT Award Amount will be payable
hereunder. For each MBO achieved by the Grantee, the Company will pay Grantee the amount set forth
on Exhibit A hereto corresponding to the respective MBO. The achievement of each MBO may
only be

 

 

proportionately reduced if so provided on Exhibit A hereto, and, in such case, the
corresponding bonus will be reduced accordingly.]

     Unless the Award is properly deferred under the terms of the Plan, the Award shall be paid to
the Grantee within 2 1/2 months after the end of the Company’s or the Grantee’s taxable year 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 Agreement amounts sufficient to satisfy applicable withholding
requirements under any federal, state or local law.

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

     3. Payment Acceleration. Payment of the Award hereunder shall accelerate if the
Grantee’s employment with the Company and its Subsidiaries and Affiliates is terminated 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. If payment is accelerated, payment of the
Award shall be made on a pro rata basis, based on performance through the most recently completed
month and the total number of days the Grantee was employed during the performance period in
relation to the scheduled number of days between the Award Date and the end of the performance
period.

     4. Change of Control. Payment of any outstanding Award shall be accelerated
immediately following a Change of Control. If payment is accelerated, payment of the Award shall
be made on a pro rata basis, based on performance through the most recently completed month and the
total number of days during the performance period before the Change of Control in relation to the
entire performance period.

     5. Adjustments for Acquisitions or Dispositions. In the event of any acquisition of
one or more businesses in fiscal 2008, the results of operations (including sales and profit or
loss) of the acquired business will be excluded for all purposes in determining 2008 EBIT. In the
event of any disposition of one or more businesses in fiscal 2008, the results of operations
(including sales and profit or loss) of the disposed business shall be included through the closing
date for purposes of determining 2008 EBIT. Subsequently, 2008 Budgeted EBIT shall be decreased
from the date of closing to reflect the disposition. In all events, the costs of any acquisition
or disposition and any related gain or loss shall be excluded for purposes of determining 2008
EBIT.

     6. Construction. This 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 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 Agreement to the
substantive law of another jurisdiction, and any litigation arising out of this 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. Amendment. This Agreement may be amended at any time by written agreement between
the Company and Grantee. Any such amendment shall be made pursuant to a resolution of the
Compensation Committee of the Company’s Board of Directors.

     8. Funding. Cash payments under this 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.

 

 

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

     10. Dispute Resolution. The parties initially shall attempt to resolve by direct
negotiation any dispute, controversy or claim arising out of or relating to this 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 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. 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. Other 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.

     11. Counterparts. This 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.

     12. Entire Agreement. This Agreement supersedes and cancels all prior written or oral
agreements and understandings relating to the terms of this Agreement.

	 	 	 	 	 	 	 	 
	GRANTEE	 	 	 	METHODE ELECTRONICS, INC.	 
	 
	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 
	   	 	 	 	   	 
	 

	 	 	 	 	 	Paul G. Shelton, Compensation Committee Chairman	 
	[_________________________]

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