Description
This document consists of a 7 page phantom stock plan and a 3 page form of award agreement by which a grantee will receive compensation equal to the value of a designated number of shares of common stock of the company (i.e. phantom shares) upon a sale of the company. The provisions have a vesting schedule based on the grantee's tenure at the time of the sale of the company, however, to avoid deferred compensation issues, the award is forfeited upon separation of the grantee from the company (i.e. it remains subject to a substantial risk of forfeiture until the triggering event). In order to allow for a sale of the company on terms involving payments over time without resulting in deferred compensation, the company has the option to pay the grantee in actual shares of common stock. In that way, their award is paid out in full upon the sale of the company (in shares) and then, as a shareholder, the grantee can receive such proceeds over time as any other common stock shareholder would without it constituting deferred compensation.
