Document:

Exhibit 10.4

 

FORM OF
 ASCENT CAPITAL GROUP, INC.

2008 INCENTIVE PLAN

NON-QUALIFIED STOCK OPTION AGREEMENT

 

THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) is made as of                      (the “Effective Date”), by and between ASCENT CAPITAL GROUP, INC., a Delaware corporation (the “Company”), and the individual whose name, address and social security number appear on the signature page hereto (the “Grantee”).

 

The Company has adopted the Ascent Capital Group, Inc. 2008 Incentive Plan (the “Plan”), a copy of which is attached to this Agreement as Exhibit A and by this reference made a part hereof, for the benefit of eligible employees of the Company and its Subsidiaries.  Capitalized terms used and not otherwise defined herein will have the meaning given thereto in the Plan.

 

Pursuant to the Plan, the Compensation Committee (the “Committee”) has determined that it would be in the interest of the Company and its stockholders to award Options to Grantee, subject to the conditions and restrictions set forth herein and in the Plan, in order to provide the Grantee additional remuneration for services rendered, to encourage the Grantee to remain in the employ of the Company or its Subsidiaries and to increase the Grantee’s personal interest in the continued success and progress of the Company.

 

The Company and the Grantee therefore agree as follows:

 

1.             Definitions.  The following terms, when used in this Agreement, have the following meanings:

 

“Annual Salary” means the annual base salary of Grantee as an employee of the Company.

 

“ASCMA Options” has the meaning specified in Section 2 of this Agreement.

 

“ASCMA Stock” has the meaning specified in Section 2 of this Agreement.

 

“Base Price” means the greater of $         per share and the Fair Market Value of a share of ASCMA Stock on the Effective Date.

 

“Business Day” means any day other than Saturday, Sunday or a day on which banking institutions in Denver, Colorado, are required or authorized to be closed.

 

“Cause” means (i) any act or omission that constitutes a breach by Grantee of any of his material obligations under the Employment Agreements; (ii) the continued failure or refusal of Grantee to substantially perform the material duties required of him as an officer and/or employee of the Company; (iii) any material violation by Grantee of any policy, rule or regulation of the Company or any law or regulation applicable to the business of the Company;

 

 

(iv) any act or omission by Grantee constituting fraud, dishonesty or misrepresentation; (v) Grantee’s gross negligence in the performance of his duties; (vi) Grantee’s conviction of, or plea of guilty or nolo contendere to, any crime (whether or not involving the Company) that constitutes a felony or crime of moral turpitude or is punishable by imprisonment of 30 days or more; or (g) any other misconduct by Grantee that is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company, provided, however, that with respect to any termination of Grantee’s employment with the Company within 12 months after a Change in Control of the Company, “Cause” will mean only a felony conviction for fraud, misappropriation of the Company’s funds or embezzlement.

 

“Change in Control” means any of the following that otherwise meets the definition of a “change in ownership,” a “change in effective control” or a “change in ownership of a substantial portion of the assets” of the Company within the meaning of Code Section 409A:

 

(i) the acquisition by any person or group (excluding John C. Malone and/or any family member(s) of John C. Malone and/or any company, partnership, trust or other entity or investment vehicle controlled by any of the foregoing persons or the holdings of which are for the primary benefit or any of such persons (collectively, the “Permitted Holders”)) of ownership of stock of the Company that, together with stock already held by such person or group, constitutes more than 50% of the total fair market value or more than 50% of the total voting power of the stock of the Company;

 

(ii) the acquisition by any person or group (other than the Permitted Holders), in a single transaction or in multiple transactions all occurring during the 12-month period ending on the date of the most recent acquisition by such person or group, of assets from the Company that have a total gross fair market value equal to or exceeding 40% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; or

 

(iii) the acquisition by any person or group (other than the Permitted Holders), in a single transaction or in multiple transactions all occurring during the 12-month period ending on the date of the most recent acquisition by such person or group, of ownership of stock of the Company possessing 30% or more of the total voting power of the stock of Company or the replacement of a majority of the Company’s Board of Directors during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board of Directors before the date of appointment or election.

 

“Close of Business” means, on any day, 5:00 p.m., Denver, Colorado time.

 

“Committee” has the meaning specified in the recitals to this Agreement.

 

“Company” has the meaning specified in the preamble to this Agreement.

 

“Company Subsidiary” means a subsidiary of the Company.

 

“Effective Date” has the meaning specified in the preamble to this Agreement.

 

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“Employment Agreements” means this Agreement, any employment agreement between Grantee and the Company and/or any other agreement between Grantee and the Company relating to Grantee’s employment and/or compensation.

 

“Good Reason” means the occurrence of any of the following without the consent of Grantee: (i) a material diminution in Grantee’s Annual Salary below the level then in effect, other than as a result of a reduction in the portion of the time devoted by Grantee to Company activities; (ii) a material diminution in Grantee’s authority, duties or responsibilities with the Company; (iii) a material change in the office or location at which the Grantee is required to perform services pursuant to the Employment Agreements; and (iv) a material breach by the Company of the terms of the Employment Agreements.  Notwithstanding the foregoing, a termination for Good Reason will not be considered to have occurred unless: (x) within 90 days following the initial existence of the circumstances constituting Good Reason, Grantee provides written notice to the Company of such circumstances; (y) the Company fails, within 30 days following such notice, to correct such circumstances to the reasonable satisfaction of Grantee; and (z) Grantee terminates his employment within 30 days following the end of such 30-day correction period.  A termination of Grantee’s employment for Good Reason will be considered an involuntary termination.

 

“Grantee” has the meaning specified in the preamble to this Agreement.

 

“Option Shares” has the meaning specified in Section 4(a) of this Agreement.

 

“Plan” has the meaning specified in the recitals of this Agreement.

 

“Required Withholding Amount” has the meaning specified in Section 5 of this Agreement.

 

“Special Termination Period” has the meaning specified in Section 7(d) of this Agreement.

 

“Term” has the meaning specified in Section 2 of this Agreement.

 

“Year of Continuous Service” has the meaning specified in Section 7(d) of this Agreement.

 

2.             Grant of Options.  Subject to the terms and conditions herein, pursuant to the Plan, the Company grants to the Grantee options to purchase from the Company, exercisable during the period commencing on the Effective Date and expiring at Close of Business on                      (the “Term”), subject to earlier termination as provided in Section 7 below, at the Base Price, the number of shares of Ascent Capital Group, Inc. Series A Common Stock, par value $0.01 per share (“ASCMA Stock”), set forth on the signature page hereto.  The Options granted hereunder are “Nonqualified Stock Options” and are hereinafter referred to as the “ASCMA Options.”  The Base Price and ASCMA Options are subject to adjustment pursuant to Section 10 below.  No fractional shares of ASCMA Stock will be issuable upon exercise of an ASCMA Option, and the Grantee will receive, in lieu of any fractional share of ASCMA Stock that the Grantee otherwise would receive upon such exercise, cash equal to the fraction

 

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representing such fractional share multiplied by the Fair Market Value of one share of ASCMA Stock as of the date on which such exercise is considered to occur pursuant to Section 4 below.

 

3.             Conditions of Exercise.  Unless otherwise determined by the Committee in its sole discretion, the ASCMA Options will be exercisable only in accordance with the conditions stated in this Section 3.

 

(a)           Subject to Section 11.1 of the Plan and the last sentence of this Section 3(a), and except as provided in Section 23, the ASCMA Options may be exercised only to the extent they have become exercisable in accordance with the provisions of this Section 3(a).  That number of ASCMA Options that is equal to (x)     % of the total number of ASCMA Options awarded under this Agreement (rounded down to the nearest whole number of ASCMA Options) shall become exercisable on each of                     , (y) that number of ASCMA Options that is equal to     % of the total number of ASCMA Options awarded under this Agreement (rounded down to the nearest whole number of ASCMA Options) shall become exercisable on each of                     , and (z) that number of ASCMA Options that is equal to     % of the total number of ASCMA Options awarded under this Agreement shall become exercisable on each of                      (with any ASCMA Options awarded under this Agreement that do not otherwise become exercisable as a result of rounding also becoming exercisable on                     ).  Notwithstanding the foregoing, (i) in the event that any date on which ASCMA Options would otherwise become exercisable is not a Business Day, such ASCMA Options will become exercisable on the Business Day next following such date, (ii) all ASCMA Options will become exercisable on the date of the Grantee’s termination of employment if (A) the Grantee’s employment with the Company and the Company Subsidiaries terminates by reason of Disability or (B) the Grantee dies while employed by the Company or a Company Subsidiary, and (iii) subject to Section 23 hereof, if the Grantee’s employment with the Company and its Subsidiaries is terminated by the Company or a Company Subsidiary without Cause, or by Grantee for Good Reason, any ASCMA Options that otherwise would become exercisable during the remainder of the calendar year in which the Grantee’s employment with the Company and its Subsidiaries is terminated will become exercisable on the date of the Grantee’s termination of employment[; provided, however, if the Grantee’s employment with the Company and its Subsidiaries is terminated by the Company or a Company Subsidiary without Cause, or by Grantee for Good Reason prior to                     , 20% of the total number of ASCMA Options awarded under this Agreement (rounded down to the nearest whole number) shall become exercisable on the date of Grantee’s termination of employment](1).

 

(b)           To the extent the ASCMA Options become exercisable, such ASCMA Options may be exercised in whole or in part (at any time or from time to time, except as otherwise provided herein) until expiration of the Term or earlier termination thereof.

 

(c)           The Grantee acknowledges and agrees that the Committee, in its discretion and as contemplated by Section 3.3 of the Plan, may adopt rules and regulations from time to

 

(1)  To be included only in grant agreements for executives of both Ascent Capital Group, Inc. and Monitronics International, Inc.

 

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time after the date hereof with respect to the exercise of the ASCMA Options and that the exercise by the Grantee of ASCMA Options will be subject to the further condition that such exercise is made in accordance with all such rules and regulations as the Committee may determine are applicable thereto.

 

4.             Manner of Exercise.  ASCMA Options will be considered exercised (as to the number of ASCMA Options specified in the notice referred to in Section 4(a) below) on the latest of (i) the date of exercise designated in the written notice referred to in Section 4(a) below, (ii) if the date so designated is not a Business Day, the first Business Day following such date or (iii) the earliest Business Day by which the Company has received all of the following:

 

(a)                                  Written notice, in such form as the Committee may require, containing such representations and warranties as the Committee may require and designating, among other things, the date of exercise and the number of shares of ASCMA Stock (“Option Shares”) to be purchased;

 

(b)                                 Payment of the Base Price for each Option Share to be purchased in any (or a combination) of the following forms:  (A) cash, (B) check or (C) the delivery, together with a properly executed exercise notice, of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds required to pay the purchase price (and, if applicable the Required Withholding Amount, as described in Section 5 below); and

 

(c)                                  Any other documentation that the Committee may reasonably require.

 

5.             Mandatory Withholding for Taxes.  The Grantee acknowledges and agrees that the Company will deduct from the Option Shares otherwise deliverable upon exercise of any ASCMA Options that number of shares of ASCMA Stock (valued at their Fair Market Value on the date of exercise) that is equal to the amount of all federal, state and local taxes required to be withheld by the Company upon such exercise, as determined by the Committee (the “Required Withholding Amount”).  If the Grantee elects to make payment of the Base Price by delivery of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds required to pay the purchase price, such instructions may also include instructions to deliver the Required Withholding Amount to the Company.  In such case, the Company will notify the broker promptly of the Committee’s determination of the Required Withholding Amount.

 

6.             Payment or Delivery by the Company.  As soon as practicable after receipt of all items referred to in Section 4, and subject to the withholding referred to in Section 5, the Company will deliver or cause to be delivered to the Grantee certificates issued in the Grantee’s name for the number of Option Shares purchased by exercise of ASCMA Options, and (ii) any cash payment to which the Grantee is entitled in lieu of a fractional Option Share, as provided in Section 2 above.  Any delivery of Option Shares will be deemed effected for all purposes when certificates representing such shares have been delivered personally to the Grantee or, if delivery is by mail, when the stock transfer agent of the Company has deposited the certificates in the United States mail, addressed to the Grantee, and any cash payment will be deemed effected when a check from the Company, payable to the Grantee and in the amount

 

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equal to the amount of the cash payment, has been delivered personally to the Grantee or deposited in the United States mail, addressed to the Grantee.

 

7.             Early Termination of ASCMA Options.  Subject to the provisions of Section 23, the ASCMA Options will terminate, prior to the expiration of the Term, at the time specified below:

 

(a)           Subject to Section 7(b), if the Grantee’s employment with the Company and its Subsidiaries is terminated other than (i) by the Company or a Company Subsidiary (whether for Cause or without Cause), (ii) by reason of death or Disability or (iii) by Grantee for Good Reason, then the ASCMA Options will terminate at the Close of Business on the first Business Day following the expiration of the 90-day period which began on the date of termination of the Grantee’s employment.

 

(b)           If the Grantee dies (i) while employed by the Company or a Company Subsidiary, or prior to the expiration of a period of time following termination of the Grantee’s employment during which the ASCMA Options remain exercisable as provided in Section 7(a) or Section 7(c), as applicable, the ASCMA Options will terminate at the Close of Business on the first Business Day following the expiration of the one-year period which began on the date of the Grantee’s death, or (ii) prior to the expiration of a period of time following termination of the Grantee’s employment during which the ASCMA Options remain exercisable as provided in Section 7(d), the ASCMA Options will terminate at the Close of Business on the first Business Day following the expiration of (A) the one-year period which began on the date of the Grantee’s death or (B) the Special Termination Period, whichever period is longer.

 

(c)           Subject to Section 7(b), if the Grantee’s employment with the Company and its Subsidiaries terminates by reason of Disability, then the ASCMA Options will terminate at the Close of Business on the first Business Day following the expiration of the one-year period which began on the date of termination of the Grantee’s employment.

 

(d)           If the Grantee’s employment with the Company and the Company Subsidiaries is terminated by the Company or a Company Subsidiary without Cause or by Grantee for Good Reason, the ASCMA Options will terminate at the Close of Business on the first Business Day following the expiration of the Special Termination Period.  The Special Termination Period is the period of time beginning on the date of the Grantee’s termination of employment and continuing for the number of days that is equal to the sum of (a) 90, plus (b) 180 multiplied by the Grantee’s total Years of Continuous Service.  A Year of Continuous Service means a consecutive 12-month period, measured by the Grantee’s hire date (as reflected in the payroll records of the Company or a Company Subsidiary) and the anniversaries of that date, during which the Grantee is employed by the Company or a Company Subsidiary without interruption.  For purposes of determining the Grantee’s Years of Continuous Service, if the Grantee was employed by a Company Subsidiary at the time of such Company Subsidiary’s acquisition by the Company, the Grantee’s employment with the Company Subsidiary prior to the acquisition date will be included in determining the Grantee’s Years of Continuous

 

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Service unless the Committee, in its sole discretion, determines that such prior employment will be excluded.

 

(e)                                  If the Grantee’s employment with the Company and the Company Subsidiaries is terminated by the Company for Cause, then the ASCMA Options will terminate immediately upon such termination of the Grantee’s employment.

 

In any event in which ASCMA Options remain exercisable for a period of time following the date of termination of the Grantee’s employment as provided above, the ASCMA Options may be exercised during such period of time only to the extent the same were exercisable as provided in Section 3 above on such date of termination of the Grantee’s employment.  Notwithstanding any period of time referenced in this Section 7 or any other provision of this Section 7 that may be construed to the contrary, the ASCMA Options will in any event terminate upon the expiration of the Term.

 

8.             Nontransferability.  During the Grantee’s lifetime, the ASCMA Options are not transferable (voluntarily or involuntarily) other than pursuant to a Domestic Relations Order and, except as otherwise required pursuant to a Domestic Relations Order, are exercisable only by the Grantee or the Grantee’s court appointed legal representative.  The Grantee may designate a beneficiary or beneficiaries to whom the ASCMA Options will pass upon the Grantee’s death and may change such designation from time to time by filing a written designation of beneficiary or beneficiaries with the Committee on the form annexed hereto as Exhibit B or such other form as may be prescribed by the Committee, provided that no such designation will be effective unless so filed prior to the death of the Grantee.  If no such designation is made or if the designated beneficiary does not survive the Grantee’s death, the ASCMA Options will pass by will or the laws of descent and distribution.  Following the Grantee’s death, the ASCMA Options, if otherwise exercisable, may be exercised by the person to whom such ASCMA Option passes according to the foregoing and such person will be deemed the Grantee for purposes of any applicable provisions of this Agreement.

 

9.             No Stockholder Rights.  Prior to the exercise of ASCMA Options in accordance with the terms and conditions set forth in this Agreement, the Grantee will not be deemed for any purpose to be, or to have any of the rights of, a stockholder of the Company with respect to any shares of ASCMA Stock, nor will the existence of this Agreement affect in any way the right or power of the Company or any stockholder of the Company to accomplish any corporate act, including, without limitation, the acts referred to in Section 11.16 of the Plan.

 

10.          Adjustments.  If the outstanding shares of ASCMA Stock are subdivided into a greater number of shares (by stock dividend, stock split, reclassification or otherwise) or are combined into a smaller number of shares (by reverse stock split, reclassification or otherwise), or if the Committee determines that any stock dividend, extraordinary cash dividend, reclassification, recapitalization, reorganization, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase any shares of ASCMA Stock, or other similar corporate event (including mergers or consolidations other than those which constitute Approved Transactions, which shall be governed by Section 11.1(b) of the Plan) affects shares of ASCMA Stock such that an adjustment is required to preserve the benefits or potential benefits intended to be made available under this Agreement, then the ASCMA Options will be subject to adjustment

 

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(including, without limitation, as to the number of ASCMA Options and the Base Price per share of such ASCMA Options) in the sole discretion of the Committee and in such manner as the Committee may deem equitable and appropriate in connection with the occurrence of any of the events described in this Section 10.

 

11.          Restrictions Imposed by Law.  Without limiting the generality of Section 11.8 of the Plan, the Grantee will not exercise the ASCMA Options, and the Company will not be obligated to make any cash payment or issue or cause to be issued any Option Shares, if counsel to the Company determines that such exercise, payment or issuance would violate any applicable law or any rule or regulation of any governmental authority or any rule or regulation of, or agreement of the Company with, any securities exchange or association upon which shares of ASCMA Stock are listed or quoted.  The Company will in no event be obligated to take any affirmative action in order to cause the exercise of the ASCMA Options or the resulting payment of cash or issuance of Option Shares to comply with any such law, rule, regulation or agreement.

 

12.          Notice.  Unless the Company notifies the Grantee in writing of a different procedure, any notice or other communication to the Company with respect to this Agreement will be in writing and will be delivered personally or sent by United States first class mail, postage prepaid and addressed as follows:

 

Ascent Capital Group, Inc.

[Address 1]

[Address 2]

Attn:  General Counsel

 

Any notice or other communication to the Grantee with respect to this Agreement will be in writing and will be delivered personally, or will be sent by United States first class mail, postage prepaid, to the Grantee’s address as listed in the records of the Company on the Effective Date, unless the Company has received written notification from the Grantee of a change of address.

 

13.          Amendment.  Notwithstanding any other provision hereof, this Agreement may be supplemented or amended from time to time as approved by the Committee as contemplated in Section 11.7(b) of the Plan.  Without limiting the generality of the foregoing, without the consent of the Grantee,

 

(a)                                  this Agreement may be amended or supplemented from time to time as approved by the Committee (i) to cure any ambiguity or to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or (ii) to add to the covenants and agreements of the Company for the benefit of the Grantee or surrender any right or power reserved to or conferred upon the Company in this Agreement, subject to any required approval of the Company’s stockholders and, provided, in each case, that such changes or corrections will not adversely affect the rights of the Grantee with respect to the Award evidenced hereby, or (iii) to make such other changes as the Company, upon advice of counsel, determines are necessary or advisable because of the adoption or promulgation of, or change in or of the interpretation of, any law or governmental rule or regulation, including any applicable federal or state securities laws; and

 

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(b)                                 subject to any required action by the Board or the stockholders of the Company, the ASCMA Options granted under this Agreement may be canceled by the Company and a new Award made in substitution therefor, provided that the Award so substituted will satisfy all of the requirements of the Plan as of the date such new Award is made and no such action will adversely affect any ASCMA Options to the extent then exercisable.

 

14.          Grantee Employment.  Nothing contained in this Agreement, and no action of the Company or the Committee with respect hereto, will confer or be construed to confer on the Grantee any right to continue in the employ of the Company or any Company Subsidiaries or interfere in any way with the right of the Company or any employing Company Subsidiary to terminate the Grantee’s employment at any time, with or without cause, subject to the provisions of any employment agreement between the Grantee and the Company or any Company Subsidiary.

 

15.          Nonalienation of Benefits.  Except as provided in Section 8 of this Agreement, (i) no right or benefit under this Agreement will be subject to anticipation, alienation, sale, assignment, hypothecation, pledge, exchange, transfer, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the same will be void, and (ii) no right or benefit hereunder will in any manner be liable for or subject to the debts, contracts, liabilities or torts of the Grantee or other person entitled to such benefits.

 

16.          Governing Law.  This Agreement will be governed by, and construed in accordance with, the internal laws of the State of Delaware.  Each party irrevocably submits to the general jurisdiction of the state and federal courts located in the State of Delaware in any action to interpret or enforce this Agreement and irrevocably waives any objection to jurisdiction that such party may have based on inconvenience of forum.

 

17.          Construction.  References in this Agreement to “this Agreement” and the words “herein,” “hereof,” “hereunder” and similar terms include all Exhibits and Schedules appended hereto.  The word “include” and all variations thereof are used in an illustrative sense and not in a limiting sense.  All decisions of the Committee upon questions regarding this Agreement will be conclusive.  Unless otherwise expressly stated herein, in the event of any inconsistency between the terms of the Plan and this Agreement, the terms of the Plan will control.  The headings of the sections of this Agreement have been included for convenience of reference only, are not to be considered a part hereof and will in no way modify or restrict any of the terms or provisions hereof.

 

18.          Duplicate Originals.  The Company and the Grantee may sign any number of copies of this Agreement.  Each signed copy will be an original, but all of them together represent the same agreement.

 

19.          Rules by Committee.  The rights of the Grantee and the obligations of the Company hereunder will be subject to such reasonable rules and regulations as the Committee may adopt from time to time.

 

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20.          Entire Agreement.  This Agreement is in satisfaction of and in lieu of all prior discussions and agreements, oral or written, between the Company and the Grantee regarding the subject matter hereof.  The Grantee and the Company hereby declare and represent that no promise or agreement not herein expressed has been made and that this Agreement contains the entire agreement between the parties hereto with respect to the Award and replaces and makes null and void any prior agreements between the Grantee and the Company regarding the Award.  This Agreement will be binding upon and inure to the benefit of the parties and their respective heirs, successors and assigns.

 

21.          Grantee Acceptance.  The Grantee will signify acceptance of the terms and conditions of this Agreement by signing in the space provided at the end hereof and returning a signed copy to the Company.

 

22.          Code Section 409A Compliance.  If any provision of this Agreement would result in the imposition of an excise tax under Section 409A of the Code and related regulations and Treasury pronouncements (“Section 409A”), that provision will be reformed to avoid imposition of the excise tax and no action taken to comply with Section 409A (or to provide that the ASCMA Options are exempt from Section 409A) shall be deemed to impair a benefit under this Agreement.

 

23.          Change in Control.  Upon any termination of Grantee’s employment without Cause or by Grantee for Good Reason, which termination occurs within 12 months following a Change in Control, (i) notwithstanding Section 3(a), all ASCMA Options held by Grantee on the date of termination, to the extent not theretofore vested, will vest fully on the date of such termination, and (ii) notwithstanding Section 7, the exercise period of any and all ASCMA Options held by Grantee on the termination date will be extended to the last day of what would be the maximum Term applicable to such ASCMA Options in the absence of termination.

 

[Remainder of this page intentionally left blank]

 

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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the Effective Date.

 

 

	
 
    	
ASCENT   CAPITAL GROUP, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ACCEPTED:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Grantee   Name:
    	
 
    
	
 
    	
Address:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SSN:
    	
 
    
				

 

 

	
Number   of shares of ASCMA Stock as to which Options are granted:
    	
                     
    

 

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Exhibit A
 to
 Non-Qualified Stock Option Agreement
 dated as of                      between Ascent Capital Group, Inc. and Grantee

 

Ascent Capital Group, Inc. 2008 Incentive Plan

 

 

Exhibit B
 to
 Non-Qualified Stock Option Agreement
 dated as of                      between Ascent Capital Group, Inc. and Grantee

 

Designation of Beneficiary

 

	
I,                                                                         
    	
(the   “Grantee”), hereby declare that upon my death 
    
	
 
    	
 
    	
(the   “Beneficiary”) of
    
	
Name
    	
 
    
				

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
,
    
	
Street   Address
    	
 
    	
City
    	
 
    	
State
    	
 
    	
Zip   Code
    	
 
    

 

	
who   is my
    	
 
    	
,   will be entitled to the
    
	
Relationship   to the Grantee
    	
 
    

 

ASCMA Options and all other rights accorded the Grantee by the above-referenced grant agreement (the “Agreement”).

 

It is understood that this Designation of Beneficiary is made pursuant to the Agreement and is subject to the conditions stated herein, including the Beneficiary’s survival of the Grantee’s death.  If any such condition is not satisfied, such rights will devolve according to the Grantee’s will or the laws of descent and distribution.

 

It is further understood that all prior designations of beneficiary under the Agreement are hereby revoked and that this Designation of Beneficiary may only be revoked in writing, signed by the Grantee, and filed with the Committee prior to the Grantee’s death.

 

 

	
 
    	
 
    	
 
    
	
Date
    	
 
    	
GranteeExhibit 10.5

 

FORM OF
 ASCENT CAPITAL GROUP, INC.
 2008 INCENTIVE PLAN 
 RESTRICTED STOCK AWARD AGREEMENT

 

THIS AGREEMENT (this “Agreement”) is made as of                      (the “Grant Date”), by and between ASCENT CAPITAL GROUP, INC., a Delaware corporation (the “Company”), and the person signing as “Grantee” on the signature page hereof (“Grantee”).

 

The Company has adopted the Ascent Capital Group, Inc. 2008 Incentive Plan (the “Plan”), a copy of which is attached to this Agreement as Exhibit A and by this reference made a part hereof, for the benefit of eligible employees of the Company and its Subsidiaries.  Capitalized terms used and not otherwise defined in this Agreement will have the meaning ascribed to them in the Plan.

 

Pursuant to the Plan, the Compensation Committee (the “Committee”) has determined that it would be in the interest of the Company and its stockholders to award shares of common stock to Grantee, subject to the conditions and restrictions set forth herein and in the Plan, in order to provide Grantee with additional remuneration for services rendered, to encourage Grantee to remain in the employ of the Company or its Subsidiaries and to increase Grantee’s personal interest in the continued success and progress of the Company.

 

The Company and Grantee therefore agree as follows:

 

1.             Award.  Pursuant to the terms of the Plan and in consideration of the covenants and promises of Grantee herein contained, the Company hereby awards to Grantee as of the Grant Date the number of shares of Ascent Capital Group, Inc. Series A Common Stock, par value $0.01 per share, set forth on Schedule 1 hereto, subject to the conditions and restrictions set forth below and in the Plan (the “Restricted Shares”).

 

2.             Issuance of Restricted Shares at Beginning of the Restriction Period.  Upon issuance of the Restricted Shares, such Restricted Shares will be registered in a book entry account (the “Account”) in the name of Grantee.  During the Restriction Period, each of the Account, any certificates representing the Restricted Shares that may be issued during the Restriction Period, and any securities constituting Retained Distributions will bear a restrictive legend to the effect that ownership of the Restricted Shares (and such Retained Distributions), and the enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms and conditions provided in the Plan and this Agreement.  Any such certificates will remain in the custody of the Company, and upon their issuance Grantee will deposit with the Company stock powers or other instruments of assignment, each endorsed in blank, so as to permit retransfer to the Company of all or any portion of the Restricted Shares and any securities constituting Retained Distributions that will be forfeited or otherwise not become vested in accordance with the Plan and this Agreement.

 

3.             Restrictions.  Restricted Shares will constitute issued and outstanding shares of the Company’s Series A Common Stock for all corporate purposes.  Grantee will have the right

 

 

to vote such Restricted Shares, to receive and retain such dividends and distributions, as the Committee may in its sole discretion designate, paid or distributed on such Restricted Shares and to exercise all other rights, powers and privileges of a holder of Series A Common Stock with respect to such Restricted Shares, except that (a) Grantee will not be entitled to delivery of the stock certificate or certificates representing such Restricted Shares until the Restriction Period shall have expired and unless all other vesting requirements with respect thereto shall have been fulfilled or waived, (b) the Company will retain custody of any stock certificate or certificates representing the Restricted Shares during the Restriction Period as provided in Section 8.2 of the Plan, (c) other than such dividends and distributions as the Committee may in its sole discretion designate, the Company or its designee will retain custody of all Retained Distributions made or declared with respect to the Restricted Shares (and such Retained Distributions will be subject to the same restrictions, terms and vesting and other conditions as are applicable to the Restricted Shares) until such time, if ever, as the Restricted Shares with respect to which such Retained Distributions shall have been made, paid or declared shall have become vested, and such Retained Distributions will not bear interest or be segregated in a separate account, (d) Grantee may not sell, assign, transfer, pledge, exchange, encumber or dispose of the Restricted Shares or any Retained Distributions or Grantee’s interest in any of them during the Restriction Period and (e) a breach of any restrictions, terms or conditions provided in the Plan or established by the Committee with respect to any Restricted Shares or Retained Distributions will cause a forfeiture of such Restricted Shares and any Retained Distributions with respect thereto.

 

4.             Vesting and Forfeiture of Restricted Shares.  Subject to earlier vesting in accordance with the provisions of Paragraph 7(b) below, Grantee will become vested as to     % of the Restricted Shares subject to this Agreement on each of                     , each such date being a Vesting Date; provided, however, that Grantee will not vest, pursuant to this Paragraph 4, in Restricted Shares as to which Grantee would otherwise vest as of a given date if Grantee has not been continuously employed by the Company or its Subsidiaries from the date of this Agreement through such date (the vesting or forfeiture of such shares in such event to be governed instead by the provisions of Paragraph 5).  Notwithstanding the foregoing, in the event that any date on which vesting would otherwise occur is a Saturday, Sunday or a holiday, such vesting will instead occur on the business day next following such date.

 

5.             Early Termination or Vesting.  Unless otherwise determined by the Committee in its sole discretion:

 

(a)           Subject to Section 25 hereof, if Grantee’s employment with the Company and its Subsidiaries terminates for any reason other than death or Disability, then the Award, to the extent not theretofore vested, will be forfeited immediately;

 

(b)           If Grantee dies while employed by the Company or a Subsidiary of the Company (a “Company Subsidiary”), then the Award, to the extent not theretofore vested, will immediately become fully vested; and

 

(c)           If Grantee’s employment with the Company or a Company Subsidiary terminates by reason of Disability, then the Award, to the extent not theretofore vested, will immediately become fully vested.

 

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6.             Completion of the Restriction Period.  On each Vesting Date with respect to each award of Restricted Shares, and the satisfaction of any other applicable restrictions, terms and conditions (a) the applicable portion of such Restricted Shares will become vested and (b) any Retained Distributions with respect to such Restricted Shares will become vested to the extent that the Restricted Shares related thereto shall have become vested, all in accordance with the terms of this Agreement.  Any Restricted Shares and Retained Distributions that shall not become vested by the final Vesting Date will be forfeited to the Company, and Grantee will not thereafter have any rights (including dividend and voting rights) with respect to such Restricted Shares or any Retained Distributions that are so forfeited.

 

7.             Adjustments; Early Vesting in Certain Events.

 

(a)           The Restricted Shares will be subject to adjustment (including, without limitation, as to the number of Restricted Shares) in the sole discretion of the Committee and in such manner as the Committee may deem equitable and appropriate in connection with the occurrence of any of the events described in Section 4.2 of the Plan following the Grant Date.

 

(b)           Subject to Section 25 hereof, upon the occurrence of any Approved Transaction, Board Change or Control Purchase, the restrictions in Paragraph 3 will lapse.  Notwithstanding the foregoing, the Committee may, in its sole discretion, determine that the restrictions in Paragraph 3 will not lapse on an accelerated basis in connection with an Approved Transaction if the Board or the surviving or acquiring corporation, as the case may be, makes or causes to be made effective provision for the taking of such action as in the opinion of the Committee is equitable and appropriate to substitute a new Award for the Award evidenced by this Agreement or to assume this Agreement and the Award evidenced hereby and in order to make such new or assumed Award, as nearly as may be practicable equivalent to the Award evidenced by this Agreement as then in effect (but before giving effect to any acceleration of the exercisability hereof unless otherwise determined by the Committee), taking into account, to the extent applicable, the kind and amount of securities, cash or other assets into or for which shares of Series A Common Stock may be changed, converted or exchanged in connection with the Approved Transaction.

 

8.             Mandatory Withholding for Taxes.  Upon the expiration of the Restriction Period, Grantee (or Beneficiary, as defined in Paragraph 10 below) must remit to the Company the amount of all federal, state or other governmental withholding tax requirements imposed upon the Company with respect to the vesting of Restricted Shares, unless provisions to pay such withholding requirements have been made to the satisfaction of the Company.  Upon the payment of any cash dividends with respect to Restricted Shares during the Restriction Period, the amount of such dividends will be reduced to the extent necessary to satisfy any withholding tax requirements applicable thereto prior to payment to Grantee.

 

9.             Delivery by the Company.  As soon as practicable after vesting in Restricted Shares pursuant to Paragraphs 4, 5 or 7, but no later than 30 days after such vesting occurs, and subject to the withholding referred to in Paragraph 8, the Company will (i) cause to be removed from the Account the restriction described in Paragraph 2 or cause to be issued and delivered to

 

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Grantee (in certificate or electronic form) Shares equal to the number of Restricted Shares that have vested, and (ii) shall cause to be delivered to Grantee any Retained Distributions with respect to such vested Shares.  If delivery of certificates is by mail, delivery of shares of Series A Common Stock will be deemed effected for all purposes when a stock transfer agent of the Company shall have deposited the certificates in the United States mail, addressed to Grantee.

 

10.           Nontransferability of Restricted Shares Before Vesting.  Before vesting and during Grantee’s lifetime, the Restricted Shares are not transferable (voluntarily or involuntarily) other than pursuant to a Domestic Relations Order.  The Grantee may designate a beneficiary or beneficiaries (each, a “Beneficiary”), to whom the Restricted Shares will pass upon Grantee’s death and may change such designation from time to time by filing a written designation of Beneficiary with the Committee on the form annexed hereto as Exhibit B or such other form as may be prescribed by the Committee, provided that no such designation will be effective unless so filed prior to the death of Grantee.  If no such designation is made or if the designated Beneficiary does not survive the Grantee’s death, the Restricted Shares will pass by will or the laws of descent and distribution.  Following Grantee’s death, the Restricted Shares will pass accordingly to the designated Beneficiary, and such Beneficiary will be deemed the Grantee for purposes of any applicable provisions of this Agreement.

 

11.           Company’s Rights.  The existence of this Agreement will not affect in any way the right or power of the Company or its stockholders to accomplish any corporate act, including, without limitation, the acts referred to in Section 11.16 of the Plan.

 

12.           Limitation of Rights.  Nothing in this Agreement or the Plan will be construed to:

 

(a)           give Grantee any right to be awarded any further Restricted Shares other than in the sole discretion of the Committee; or

 

(b)           give Grantee or any other person any interest in any fund or in any specified asset or assets of the Company or any Company Subsidiary.

 

13.           Prerequisites to Benefits.  Neither Grantee nor any person claiming through Grantee will have any right or interest in the Restricted Shares awarded hereunder, unless and until there shall have been full compliance with all the terms, conditions and provisions of this Agreement and the Plan which affect the Grantee or such other person.

 

14.           Restrictions Imposed by Law.  Without limiting the generality of Section 11.8 of the Plan, Grantee will not require the Company to deliver any Restricted Shares and the Company will not be obligated to deliver any Restricted Shares if counsel to the Company determines that such delivery or payment would violate any applicable law or any rule or regulation of any governmental authority or any rule or regulation of, or agreement of the Company with, any securities exchange or association upon which the Series A Common Stock is listed or quoted.  The Company will in no event be obligated to take any affirmative action in order to cause the delivery of any Restricted Shares to comply with any such law, rule, regulation or agreement.

 

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15.           Notice.  Unless the Company notifies Grantee in writing of a different procedure or address, any notice or other communication to the Company with respect to this Agreement will be in writing and will be delivered personally or sent by first class mail, postage prepaid, to the following address:

 

Ascent Capital Group, Inc.

[Address 1]

[Address 2]

Attn:  General Counsel

 

Any notice or other communication to Grantee with respect to this Agreement will be in writing and will be delivered personally, or will be sent by first class mail, postage prepaid, to Grantee’s home address set forth below his signature on this Agreement, unless the Company has received written notification from Grantee of a change of address.

 

16.           Amendment.  Notwithstanding any other provision hereof, this Agreement may be supplemented or amended from time to time as approved by the Committee as contemplated by Section 11.7(b) of the Plan.  Without limiting the generality of the foregoing, without the consent of Grantee,

 

(a)           this Agreement may be amended or supplemented from time to time as approved by the Committee (i) to cure any ambiguity or to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, (ii) to add to the covenants and agreements of the Company for the benefit of Grantee or surrender any right or power reserved to or conferred upon the Company in this Agreement, subject to any required approval of the Company’s stockholders and provided, in each case, that such changes or corrections will not adversely affect the rights of Grantee with respect to the Award evidenced hereby or (iii) to make such other changes as the Company, upon advice of counsel, determines are necessary or advisable because of the adoption or promulgation of, or change in or of the interpretation of, any law or governmental rule or regulation, including any applicable federal or state securities laws; and

 

(b)           subject to any required action by the Board or the Company’s stockholders, the Award evidenced by this Agreement may be canceled by the Committee and a new Award made in substitution therefor, provided that the Award so substituted will satisfy all of the requirements of the Plan as of the date such new Award is made and no such action will adversely affect the Restricted Shares to the extent then vested.

 

17.           Grantee Employment.  Nothing contained in this Agreement, and no action of the Company or the Committee with respect hereto, will confer or be construed to confer on Grantee any right to continue in the employ of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or any employing Company Subsidiary to terminate Grantee’s employment at any time, with or without cause; subject, however, to the provisions of any employment agreement between Grantee and the Company or any Company Subsidiary.

 

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18.           Governing Law.  This Agreement will be governed by, and construed in accordance with, the internal laws of the State of Delaware.  Each party irrevocably submits to the general jurisdiction of the state and federal courts located in the State of Delaware in any action to interpret or enforce this Agreement and irrevocably waives any objection to jurisdiction that such party may have based on inconvenience of forum.

 

19.           Construction.  References in this Agreement to “this Agreement” and the words “herein,” “hereof,” “hereunder” and similar terms include all Exhibits and Schedules appended hereto, including the Plan.  This Agreement is entered into, and the Award evidenced hereby is granted, pursuant to the Plan and will be governed by and construed in accordance with the Plan and the administrative interpretations adopted by the Committee thereunder.  All decisions of the Committee upon questions regarding the Plan or this Agreement will be conclusive.  Unless otherwise expressly stated herein, in the event of any inconsistency between the terms of the Plan and this Agreement, the terms of the Plan will control.  The headings of the paragraphs of this Agreement have been included for convenience of reference only, are not to be considered a part hereof and will in no way modify or restrict any of the terms or provisions hereof.

 

20.           Duplicate Originals.  The Company and Grantee may sign any number of copies of this Agreement.  Each signed copy will be deemed to be an original, but all of them together represent the same agreement.

 

21.           Rules by Committee.  The rights of Grantee and the obligations of the Company hereunder will be subject to such reasonable rules and regulations as the Committee may adopt from time to time hereafter.

 

22.           Entire Agreement.  This Agreement is in satisfaction of and in lieu of all prior discussions and agreements, oral or written, between the Company and Grantee, with respect to the subject matter hereof.  Grantee and the Company hereby declare and represent that no promise or agreement not herein expressed has been made and that this Agreement contains the entire agreement between the parties hereto with respect to the Restricted Shares and replaces and makes null and void any prior agreements between Grantee and the Company regarding the Restricted Shares.

 

23.           Grantee Acceptance.  Grantee shall signify acceptance of the terms and conditions of this Agreement by signing in the space provided at the end hereof and returning a signed copy to the Company.

 

24.           Code Section 409A Compliance.  If any provision of this Agreement would result in the imposition of an excise tax under Section 409A of the Code and related regulations and Treasury pronouncements (“Section 409A”), that provision will be reformed to avoid imposition of the excise tax and no action taken to comply with Section 409A (or to provide that the Restricted Shares are exempt from Section 409A) shall be deemed to impair a benefit under this Agreement.

 

25.           Change in Control.

 

(a)           Upon any termination of Grantee’s employment by the Company without Cause or by Grantee for Good Reason, which termination occurs within 12 months following a

 

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Change in Control, all Restricted Shares held by Grantee on the date of termination, to the extent not theretofore vested, will vest fully on the date of such termination.

 

(b)           For purposes of this Section 25, the following terms shall have the following meanings:

 

i.              “Base Salary” means the aggregate annual base salary of Grantee as an employee or independent contractor of the Company and/or any of its Subsidiaries.

 

ii.             Notwithstanding any other definition of “Cause” in Grantee’s Employment Agreements, with respect to any termination of Grantee’s Employment Agreements by the Company within 12 months after a Change in Control of the Company, “Cause” will mean only a felony conviction for fraud, misappropriation of the Company’s funds or embezzlement.

 

iii.            “Change in Control” means any of the following that otherwise meets the definition of a “change in ownership,” a “change in effective control” or a “change in ownership of a substantial portion of the assets” of the Company within the meaning of Code Section 409A:

 

(1)           the acquisition by any person or group (excluding John C. Malone and/or any family member(s) of John C. Malone and/or any company, partnership, trust or other entity or investment vehicle controlled by any of the foregoing persons or the holdings of which are for the primary benefit or any of such persons (collectively, the “Permitted Holders”)) of ownership of stock of the Company that, together with stock already held by such person or group, constitutes more than 50% of the total fair market value or more than 50% of the total voting power of the stock of the Company;

 

(2)           the acquisition by any person or group (other than the Permitted Holders), in a single transaction or in multiple transactions all occurring during the 12-month period ending on the date of the most recent acquisition by such person or group, assets from the Company that have a total gross fair market value equal to or exceeding 40% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; or

 

(3)           the acquisition by any person or group (other than the Permitted Holders), in a single transaction or in multiple transactions all occurring during the 12-month period ending on the date of the most recent acquisition by such person or group, of ownership of stock of the Company possessing 30% or more of the total voting power of the stock of Company or the replacement of a majority of the Company’s Board of Directors during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board of Directors before the date of appointment or election.

 

iv.            “Employment Agreements” means this Agreement, any employment agreement between Grantee and the Company and/or any other agreement between Grantee and the Company relating to Grantee’s employment and/or compensation, as from time to time may be in effect.

 

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v.             “Good Reason” means the occurrence of any of the following without the consent of Grantee: (i) a material diminution in Grantee’s Base Salary below the level then in effect; (ii) a material diminution in Grantee’s authority, duties or responsibilities with the Company; [and] (iii) [a relocation of the office or location at which the Grantee is required to perform services for the Company and its Subsidiaries to a location that is more than 50 miles from Englewood, Colorado; and (iv)] a material breach by the Company of the terms of the Employment Agreements.  Notwithstanding the foregoing, a termination for Good Reason will not be considered to have occurred unless: (x) within 90 days following the initial existence of the circumstances constituting Good Reason, Grantee provides written notice to the Company of such circumstances; (y) the Company fails, within 30 days following such notice, to correct such circumstances to the reasonable satisfaction of Grantee; and (z) Grantee terminates his employment within 30 days following the end of such 30-day correction period.  A termination of Grantee’s employment for Good Reason will be considered an involuntary termination.

 

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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the Grant Date.

 

 

	
 
    	
ASCENT   CAPITAL GROUP, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ACCEPTED:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
               ,   Grantee
    
	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SSN:
    

 

9

 

Exhibit A to Restricted Stock Award Agreement

dated as of                      between

Ascent Capital Group, Inc. and Grantee

 

Ascent Capital Group, Inc. 2008 Incentive Plan

 

 

Exhibit B to Restricted Stock Award Agreement

dated as of                      between

Ascent Capital Group, Inc. and Grantee

 

 

Designation of Beneficiary

 

I,                                                                 (the “Grantee”), hereby declare that upon my death 

                                                                                                         (the “Beneficiary”) of

Name

 

	
 
    	
 
    	
 
    	
,
    
	
Street Address
    	
City
    	
State
    	
Zip Code
    

 

who is my                                                                                                                                         , will be entitled to the

Relationship to the Grantee

 

Restricted Shares and all other rights accorded the Grantee by the above-referenced grant agreement (the “Agreement”).

 

It is understood that this Designation of Beneficiary is made pursuant to the Agreement and is subject to the conditions stated herein, including the Beneficiary’s survival of the Grantee’s death.  If any such condition is not satisfied, such rights will devolve according to the Grantee’s will or the laws of descent and distribution.

 

It is further understood that all prior designations of beneficiary under the Agreement are hereby revoked and that this Designation of Beneficiary may only be revoked in writing, signed by the Grantee, and filed with the Committee prior to the Grantee’s death.

 

 

	
 
    	
 
    	
 
    
	
Date
    	
 
    	
Grantee
    

 

 

Schedule 1 to Restricted Stock Award

Agreement dated as of            

between Ascent Capital Group, Inc. and Grantee

 

Grantee:

 

Grant Date:

 

Restricted Shares:

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