RESTRICTED STOCK AGREEMENT
This RESTRICTED STOCK AGREEMENT (this "Agreement") is entered
into as of October ___, 2006, by and between Xxxxxxx Corporation, a Delaware
corporation (the "Company"), and Xxxxxxx X. Xxxx, a resident of the State of
Tennessee ("Executive"). Certain definitions are set forth in Section 9 of
this Agreement.
RECITALS:
Executive and the Company are parties to that certain Employment
Agreement, dated as of the date hereof (the "Employment Agreement"),
pursuant to which the Company has agreed to issue and award to Executive
shares of its common stock to be purchased by Executive at par value $.0001
per share ("Common Stock"), on the terms and subject to the conditions set
forth in this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Agreement hereby agree
as follows:
Section 1. Effective Time. This Agreement shall become effective
upon the date entered in paragraph one above.
Section 2. Restricted Stock Award. On October 23, 2006, the Company
shall issue to Executive 1,200,000 restricted shares of Common Stock (the
"Restricted Stock"), which shall be subject to the terms and conditions
hereof. The Company shall promptly thereafter deliver to Executive
certificate(s) representing the Restricted Stock. Subject to the terms and
conditions of this Agreement, Executive shall have all of the rights of a
stockholder of the Company with respect to the Restricted Stock, including,
without limitation the right to vote such stock on any matter to be voted on
by the stockholders of Company and the right to receive dividends with respect
to the stock, provided that such rights shall terminate upon forfeiture of
any such stock pursuant to Section 4 hereof, and provided further that
Executive may not transfer or assign any Restricted Stock except to the
extent such stock is vested hereunder.
Section 3. No Guarantee of Employment. Executive acknowledges and
agrees that neither the issuance of the Restricted Stock to Executive nor any
provision contained herein shall entitle Executive to remain in the employment
of the Company or any of its Subsidiaries or affect the right of the Company
or any of its Subsidiaries, subject to the terms of the Employment Agreement
or any successor agreement, to terminate Executive's employment at any time
for any reason.
Section 4. Vesting of Restricted Stock.
(a) For so long as Executive is employed by the Company, the
Restricted Stock shall vest and become unrestricted as follows:
(i) 300,000 shares of Restricted Stock shall vest upon issuance;
(ii) 25,000 shares of Restricted Stock shall vest on the 23rd day
of each month for thirty-six months, the expiration of the Employment
Agreement.
(b) Notwithstanding subparagraph (a) above:
(i) If Executive's employment by the Company and its
Subsidiaries is terminated by the Company without Cause or by
Executive for Good Reason, the portion of the Restricted Stock that
has not become vested as of the date of such event shall become fully
vested immediately prior to such termination of employment.
(ii) If Executive's employment by the Company and its
Subsidiaries is terminated due to the death or Disability of
Executive, the portion of the Restricted Stock that has not become
vested as of the date of such event shall become fully vested
immediately prior to such termination of employment.
(iii) If Executive has been continuously employed by the Company
or a Subsidiary from the date of this Agreement until the occurrence
of a Change of Control, the portion of the Restricted Stock that has
not become vested as of the date of the Change of Control shall
become fully vested immediately prior to the Change of Control.
(c) Except as set forth herein, any Restricted Stock that is not vested
shall be automatically forfeited by Executive upon his termination of
employment by the Company and its Subsidiaries, without any action by
Executive or the Company. In such event, Executive shall deliver to the
Company certificate(s) representing the forfeited shares, together with such
additional documentation as the Company may reasonably request.
Section 5. Tax Matters. The parties acknowledge: (a) that Executive
will be required to recognize income with respect to the Restricted Stock if
and when such stock becomes vested hereunder or, if Executive makes an
election under Section 83(b) of the Internal Revenue Code of 1986, as amended,
upon issuance of such stock; and (b) that the Company may have tax withholding
obligations resulting from Executive's recognition of income. In addition to
the other obligations of the Company hereunder, the Company, upon recognition
of income by Executive with respect to any Restricted Stock, shall pay to
Executive in cash an amount equal to Executive's total state and federal
income tax liability with respect to such income, plus an amount equal to
Executive's total state and federal income tax liability with respect any
cash payments hereunder, all determined based on the highest state and
federal marginal income tax rates then in effect (collectively, the "Tax
Payment"). The Company shall withhold the amount of the Tax Payment to the
extent necessary to meet its tax withholding obligations (with respect to
both the Restricted Stock and the Tax Payment) and shall pay the remainder
of the Tax Payment, if any, to Executive in cash. In the event it is
subsequently determined that the amount of income reported by the Company
with respect to the Restricted Stock is understated, the amount of the Tax
Payment shall thereupon be increased (in accordance with the methodology
set forth herein) to reflect the increase in income recognized by Executive,
and the Company shall immediately pay the amount of such increase to Executive
in cash.
Section 6. Stock Certificates. Executive hereby acknowledges that
any certificates evidencing the shares of Restricted Stock of the Company
issued pursuant to this Agreement shall bear the following restrictive
legends:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT FOR THESE SHARES OR AN OPINION OF THE COMPANY'S
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE ALSO SUBJECT
TO TRANSFER RESTRICTIONS AND POTENTIAL FORFEITURE
PURSUANT TO THE PROVISIONS OF THE RESTRICTED STOCK
AWARD AGREEMENT, DATED OCTOBER___, 2006, BETWEEN THE
COMPANY AND XXXXXXX X. XXXX, WHICH IS AVAILABLE FOR
INSPECTION AT THE PRINCIPAL OFFICES OF XXXXXXX CORPORATION.
Section 7. Share Adjustment. The Company hereby confirms that (i)
in the event the outstanding shares of Common Stock of the Company shall be
changed into an increased number of shares, through a stock dividend or a
split-up of shares, or into a decreased number of shares, through a combination
of shares, then immediately after the record date for such change, the number
of shares of Restricted Stock then subject to this Agreement shall be
proportionately increased, in case of such stock dividend or split-up of
shares, or proportionately decreased, in case of such combination of shares;
and (ii) in the event that, as result of a reorganization, sale, merger,
consolidation or similar occurrence, there shall be any other change in
the shares of Common Stock of the Company, or of any stock or other
securities into which such Common Stock shall have been changed, or for
which it shall have been exchanged, then equitable adjustments to the shares
of Restricted Stock then subject to this Agreement (including, but not
limited to, changes in the number or kind of shares then subject to this
Agreement) shall be made.
Section 8. Registration of Shares. The Company agrees that within
sixty (60) calendar days after the Company becomes subject to the reporting
requirements of the Securities Exchange Act and eligible to register shares
on Form S-8, the Company shall cause the Restricted Stock to be registered
with the Securities and Exchange Commission on Form S-8 or any similar form
registration. The Company shall be responsible for any and all fees and
expenses related to such registration.
Section 9. Definitions.
"Cause" has the meaning ascribed to it in the Employment Agreement.
"Change of Control" means the occurrence of any of the following events
after the date hereof: (a) any Person, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act, becomes the beneficial owner
of the Company's securities having a majority of the combined voting power of
the Company; (b) as the result of, or in connection with any merger or other
business combination of the Company, the holders of the voting securities of
the Company immediately prior to such transaction constitute, following such
transaction, less than a majority of the combined voting power of the
then-outstanding securities of the surviving entity (or in the event each
entity to such business combination survives, the surviving entity that is
the parent entity) after such transaction; or (c) the Company sells or
transfers all of or substantially all of its assets, and the direct and
indirect holders of the Company's voting securities immediately prior to
such transaction hold less than a majority of the voting power of the
then-outstanding securities of the acquiring entity after such transaction.
"Disability" the meaning ascribed to it in the Employment Agreement.
"Good Reason" has the meaning ascribed to it in the Employment
Agreement.
"Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, investment fund, any other
business entity and a governmental entity or any department, agency or
political subdivision thereof.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association, or business entity of which (i)
if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers, or trustees thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof, or (ii)
if a limited liability company, partnership, association, or other business
entity (other than a corporation), a majority of partnership or other
similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that
Person or a combination thereof. For purposes hereof, a Person or Persons
shall be deemed to have a majority ownership interest in a limited liability
company, partnership, association, or other business entity (other than a
corporation) if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association, or other business entity
gains or losses or shall be or control any managing director or general
partner of such limited liability company, partnership, association, or
other business entity. For purposes hereof, references to a "Subsidiary"
of any Person shall be given effect only at such times that such Person
has one or more Subsidiaries, and, unless otherwise indicated, the term
"Subsidiary" refers to a Subsidiary of the Company.
Section 10. Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given and received when (a) delivered by hand (with
confirmation of receipt), (b) sent by facsimile with confirmation of
transmission by the transmitting equipment, (c) received by the addressee,
if sent by certified mail, return receipt requested, or (d) received by the
addressee, if sent by a nationally recognized overnight delivery service,
return receipt requested, in each case to the appropriate addresses or
facsimile numbers set forth below each party's signature hereto (or to
such other addresses or facsimile numbers as a party may designate by
notice to the other parties).
Section 11. General Provisions.
(a) Severability. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held by a court of
competent jurisdiction to be invalid, illegal or unenforceable in any
respect in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement
or the application of that provision to any other person or circumstance,
and this Agreement shall then be construed in that jurisdiction as if such
invalid, illegal or unenforceable provision had not been contained in this
Agreement, but only to the extent of such invalidity, illegality or
unenforceability.
(b) Complete Agreement. This Agreement constitutes the entire
understanding between Executive and the Company with respect to the subject
matter hereof, and supersedes all other agreements, whether written or oral,
related thereto.
(c) No Strict Construction. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express
their mutual intent, and no rule of strict construction shall be applied
against any party.
(d) Counterparts. This Agreement may be executed in counterparts,
each of which will be deemed to be an original copy of this Agreement and
all of which, when taken together, will be deemed to constitute one and the
same agreement.
(e) Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and permitted assigns of the parties hereto whether
or not so expressed.
(f) Governing Law; Forum; Service of Process. This Agreement shall
be governed by and construed in accordance with the laws of the State of
Tennessee. This Agreement and its subject matter have substantial contacts
with Tennessee, and all actions, suits, or other proceedings with respect
to this Agreement shall be brought only in a court of competent jurisdiction
sitting in Xxxxxxxxxx County, Tennessee, or in the Federal District Court
having jurisdiction over that county. In any such action, suit, or
proceeding, such court shall have personal jurisdiction of all of the
parties hereto, and service of process upon them under any applicable
statutes, laws, and rules shall be deemed valid and good.
(g) MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH
APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES),
THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
OF THE JUDICIAL SYSTEM AND OF ARBITRATION, EACH PARTY TO THIS AGREEMENT
HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING
BROUGHT TO RESOLVE ANY DISPUTE BETWEEN OR AMONG ANY OF THE PARTIES HERETO,
WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED
WITH, RELATED OR INCIDENTAL TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREBY AND/OR THE RELATIONSHIP ESTABLISHED AMONG THE PARTIES HEREUNDER.
(h) Amendment. This Agreement may be amended, modified or
supplemented only by a writing executed by or on behalf of the Company and
Executive.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
Xxxxxxx Corporation
By:
Name:
Its:
Xxxxxxx X. Xxxx
Notices Schedule
If to the Company:
Xxxxxxx Corporation
P. O. Xxx 0000
XxXxxxxxxxx, XX 00000-0000
Attn:
Facsimile:
If to Executive:
Xxxxxxx X. Xxxx
000 Xxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile:
with copies to:
Xxxxxxxx & Xxx, PLC
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
