RESTRICTED STOCK AGREEMENT ALLOY, INC.
EXHIBIT 10.40
ALLOY, INC.
AGREEMENT made as of
the day
of ,
20 (the “Grant
Date”), between Alloy, Inc. (the “Company”), a
Delaware corporation having its principal place of business in
New York, New York,
and of (the
“Participant”).
WHEREAS, the Company has adopted the Alloy, Inc. [name of plan]
(the “Plan”) to promote the interests of the Company
by providing an incentive for employees, directors and
consultants of the Company or its Affiliates;
WHEREAS, pursuant to the provisions of the Plan, the Company
wishes to offer for sale to the Participant shares of the
Company’s common stock, $.01 par value per share
(“Common Stock”), in accordance with the provisions of
the Plan, all on the terms and conditions hereinafter set forth;
WHEREAS, Participant wishes to accept said offer; and
WHEREAS, the parties hereto understand and agree that any terms
used and not defined herein have the meanings ascribed to such
terms in the Plan.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Terms of Purchase. The
Participant hereby accepts the offer of the Company to issue to
the Participant, in accordance with the terms of the Plan and
this
Agreement, Shares
of the Company’s Common Stock (such shares, subject to
adjustment pursuant to Section 7 of the Plan and
Subsection 2.1(i) hereof, the “Granted Shares”)
at a purchase price per share of
$ (the
“Purchase Price”), [such Purchase Price to be paid,
pursuant to the provisions of Section 9 of the Plan, by
virtue of past services rendered to the Company,] receipt of
which is hereby acknowledged by the Company.
[Alternative — Payment shall be made in accordance
with Section 9 of the Plan.]
2.1. Company’s Lapsing Repurchase Right.
(a) Lapsing Repurchase Right. Except as set
forth in Subsections 2.1(b), 2.1(c) and 2.1(d) hereof, if
for any reason the Participant no longer is an employee,
director or consultant of the Company or an Affiliate prior
to ,
20 , the Company (or
its designee) shall have the option, but not the obligation, to
purchase from the Participant (or the Participant’s
Survivor), and, if the Company exercises such option, the
Participant (or the Participant’s Survivor) shall be
obligated to sell to the Company (or its designee), at a price
per Granted Share equal to the Purchase Price, all or any part
of the Granted Shares set forth in clauses (i),
(ii) and (iii) below (the “Lapsing Repurchase
Right”). The Company’s Lapsing Repurchase Right shall
be valid for a period of one year commencing with the date of
such termination of employment or service. Notwithstanding any
other provision hereof, if the Company is prohibited during such
one year period from exercising its Lapsing Repurchase Right by
Section 160 of the Delaware General Corporation Law as
amended from time to time (or any successor provision), then the
time period during which such Lapsing Repurchase Right may be
exercised shall be extended until 30 days after the Company
is first not so prohibited.
| (i) If such termination is prior to , 20 , the Company shall have the option to repurchase all of the Granted Shares acquired by the Participant hereunder. | |
| (ii) If such termination is on or after , 20 , the Company shall have the option to repurchase all of the Granted Shares less of the Granted Shares for each full year elapsed after |
| such date that the Participant continues to serve as an employee, director or consultant of the Company or an Affiliate. | |
| (iii) Notwithstanding anything to the contrary contained in this Agreement, if the Company or an Affiliate terminates the Participant’s employment or service for “cause” (as defined in the Plan) or if the Administrator determines, within 90 days after the Participant’s termination, that either prior or subsequent to the Participant’s termination the Participant engaged in conduct that would constitute “cause,” the Company shall have the option to repurchase all of the Granted Shares acquired by the Participant hereunder at the Purchase Price. |
(b) Effect of Termination for Disability or upon
Death. Except as otherwise provided in
Subsection 2.1(a)(iii) above, the following rules apply if
the Participant ceases to be an employee, director or consultant
of the Company or an Affiliate by reason of Disability or death:
to the extent the Company’s Lapsing Repurchase Right has
not lapsed as of the date of Disability or death, as case may
be, the Company may exercise such Lapsing Repurchase Right;
provided, however, that the Company’s Lapsing Repurchase
Right shall be deemed to have lapsed to the extent of a pro rata
portion of the Granted Shares through the date of Disability or
death, as would have lapsed had the Participant not become
Disabled or died, as the case may be. The proration shall be
based upon the number of days accrued in such current vesting
period prior to the Participant’s date of Disability or
death, as the case may be.
(c) Effect of Termination Without
“Cause”. Except as otherwise provided in
Subsection 2.1(a)(iii) above, the Company’s Lapsing
Repurchase Right shall terminate, and the Participant’s
ownership of all Granted Shares then owned by the Participant
shall become vested, if the Company or an Affiliate terminates
the Participant’s employment or service other than for
“cause” (as defined in the Plan).
(d) Effect of Change in Control. Except as
otherwise provided in Subsection 2.1(a)(iii) above, the
Company’s Lapsing Repurchase Right shall terminate, and the
Participant’s ownership of all Granted Shares then owned by
the Participant shall become vested, upon a Change of Control of
the Company.
Change of Control means the occurrence of any of
the following events:
| (i) Ownership. Any “Person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the “Beneficial Owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities (excluding for this purpose the Company or its Affiliates or any employee benefit plan of the Company) pursuant to a transaction or a series of related transactions which the Board of Directors does not approve; or | |
| (ii) Merger/ Sale of Assets. A merger or consolidation of the Company whether or not approved by the Board of Directors, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation outstanding immediately after such merger or consolidation, or the stockholders of the Company approve an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; or | |
| (iii) Change in Board Composition. A change in the composition of the Board of Directors, as a result of which less than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of April 2, 2004, or (B) are elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company). |
(e) Closing. If the Company exercises the
Lapsing Repurchase Right, the Company shall notify the
Participant, or, in the case of the Participant’s death,
his or her Survivor, in writing of its intent to repurchase
2
the Granted Shares. Such notice may be mailed by the Company up
to and including the last day of the time period provided for
above for exercise of the Lapsing Repurchase Right. The notice
shall specify the place, time and date for payment of the
repurchase price (the “Closing”) and the number of
Granted Shares with respect to which the Company is exercising
the Lapsing Repurchase Right. The Closing shall be not less than
ten days nor more than 60 days from the date of mailing of
the notice, and the Participant or the Participant’s
Survivor with respect to the Granted Shares which the Company
elects to repurchase shall have no further rights as the owner
thereof from and after the date specified in the notice. At the
Closing, the repurchase price shall be delivered to the
Participant or the Participant’s Survivor and the Granted
Shares being repurchased, duly endorsed for transfer, shall, to
the extent that they are not then in the possession of the
Company, be delivered to the Company by the Participant or the
Participant’s Survivor.
(f) Escrow. The certificates representing all
Granted Shares acquired by the Participant hereunder which from
time to time are subject to the Lapsing Repurchase Right shall
be delivered to the Company and the Company shall hold such
Granted Shares in escrow as provided in this
Subsection 2.1(f). Promptly following receipt by the
Company of a written request from the Participant, the Company
shall release from escrow and deliver to the Participant a
certificate for the whole number of Granted Shares, if any, as
to which the Company’s Lapsing Repurchase Right has lapsed.
In the event of a repurchase by the Company of Granted Shares
subject to the Lapsing Repurchase Right, the Company shall
release from escrow and cancel a certificate for the number of
Granted Shares so repurchased. Any securities distributed in
respect of the Granted Shares held in escrow, including, without
limitation, shares issued as a result of stock splits, stock
dividends or other recapitalizations, shall also be held in
escrow in the same manner as the Granted Shares.
(g) Prohibition on Transfer. The Participant
recognizes and agrees that all Granted Shares which are subject
to the Lapsing Repurchase Right may not be sold, transferred,
assigned, hypothecated, pledged, encumbered or otherwise
disposed of, whether voluntarily or by operation of law, other
than to the Company (or its designee). However, the Participant,
with the approval of the Administrator, may transfer the Granted
Shares for no consideration to or for the benefit of the
Participant’s Immediate Family (including, without
limitation, to a trust for the benefit of the Participant’s
Immediate Family or to a partnership or limited liability
company for one or more members of the Participant’s
Immediate Family), subject to such limits as the Administrator
may establish, and the transferee shall remain subject to all
the terms and conditions applicable to this Agreement prior to
such transfer and each such transferee shall so acknowledge in
writing as a condition precedent to the effectiveness of such
transfer. The term “Immediate Family” shall mean the
Participant’s spouse, former spouse, parents, children,
stepchildren, adoptive relationships, sisters, brothers, nieces
and nephews and grandchildren (and, for this purpose, shall also
include the Participant. The Company shall not be required to
transfer any Granted Shares on its books which shall have been
sold, assigned or otherwise transferred in violation of this
Subsection 2.1(g), or to treat as the owner of such Granted
Shares, or to accord the right to vote as such owner or to pay
dividends to, any person or organization to which any such
Granted Shares shall have been so sold, assigned or otherwise
transferred, in violation of this Subsection 2.1(g).
(h) Failure to Deliver Granted Shares to be
Repurchased. If the Granted Shares to be repurchased by
the Company under this Agreement are not in the Company’s
possession pursuant to Subsection 2.1(f) above or otherwise
and the Participant or the Participant’s Survivor fails to
deliver such Granted Shares to the Company (or its designee),
the Company may elect (i) to establish a segregated account
in the amount of the repurchase price, such account to be turned
over to the Participant or the Participant’s Survivor upon
delivery of such Granted Shares, and (ii) immediately to
take such action as is appropriate to transfer record title of
such Granted Shares from the Participant to the Company (or its
designee) and to treat the Participant and such Granted Shares
in all respects as if delivery of such Granted Shares had been
made as required by this Agreement. The Participant hereby
irrevocably grants the Company a power of attorney which shall
be coupled with an interest for the purpose of effectuating the
preceding sentence.
(i) Adjustments. The Plan contains provisions
covering the treatment of Shares in a number of contingencies
such as stock splits and mergers. Provisions in the Plan for
adjustment with respect to the Shares and the related provisions
with respect to successors to the business of the Company are
hereby made applicable hereunder and are incorporated herein by
reference; provided, however, that in the event of a
3
Change of Control (as defined in Section 2.1(d) above),
100% of the Shares which would have vested in each vesting
installment remaining under this Option will be vested for
purposes hereof.
3. Legend. In addition to any legend required
pursuant to the Plan, all certificates representing the Granted
Shares to be issued to the Participant pursuant to this
Agreement shall have endorsed thereon a legend substantially as
follows:
| “The shares represented by this certificate are subject to restrictions set forth in a Restricted Stock Agreement dated as of , 20 with this Company, a copy of which Agreement is available for inspection at the offices of the Company or will be made available upon request.” |
4. Purchase for Investment; Securities Law
Compliance. If the offering and sale of the Granted
Shares have not been effectively registered under the
1933 Act, the Participant hereby represents and warrants
that he or she is acquiring the Granted Shares for his or her
own account, for investment, and not with a view to, or for sale
in connection with, the distribution of any such Granted Shares.
The Participant specifically acknowledges and agrees that any
sales of Granted Shares shall be made in accordance with the
requirements of the 1933 Act, in a transaction as to which
the Company shall have received an opinion of counsel
satisfactory to it confirming such compliance. The Participant
shall be bound by the provisions of the following legend which
shall be endorsed upon the certificate(s) evidencing the Shares
issued:
| “The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws.” |
5. Incorporation of the Plan. The Participant
specifically understands and agrees that the Granted Shares
issued under the Plan are being sold to the Participant pursuant
to the Plan, a copy of which Plan the Participant acknowledges
he or she has read and understands and by which Plan he or she
agrees to be bound. The provisions of the Plan are incorporated
herein by reference.
6. Tax Liability of the Participant and Payment of
Taxes. The Participant acknowledges and agrees that any
income or other taxes due from the Participant with respect to
the Granted Shares issued pursuant to this Agreement, including,
without limitation, the Lapsing Repurchase Right, shall be the
Participant’s responsibility. Without limiting the
foregoing, the Participant agrees that, to the extent that the
lapsing of restrictions on disposition of any of the Granted
Shares or the declaration of dividends on any such shares before
the lapse of such restrictions on disposition results in the
Participant’s being deemed to be in receipt of earned
income under the provisions of the Code, the Company shall be
entitled to immediate payment from the Participant of the amount
of any tax required to be withheld by the Company.
Upon execution of this Agreement, the Participant may file an
election under Section 83 of the Code in substantially the
form attached as Exhibit B. The Participant
acknowledges that if she does not file such an election, as the
Granted Shares are released from the Lapsing Repurchase Right in
accordance with Section 2.1, the Participant will have
income for tax purposes equal to the fair market value of the
Granted Shares at such date, less the price paid for the Granted
Shares by the Participant.
7. Equitable Relief. The Participant
specifically acknowledges and agrees that in the event of a
breach or threatened breach of the provisions of this Agreement
or the Plan, including the attempted transfer of the Granted
Shares by the Participant in violation of this Agreement,
monetary damages may not be adequate to compensate the Company,
and, therefore, in the event of such a breach or threatened
breach, in addition to any right to damages, the Company shall
be entitled to equitable relief in any court having competent
jurisdiction. Nothing herein shall be construed as prohibiting
the Company from pursuing any other remedies available to it for
any such breach or threatened breach.
8. No Obligation to Maintain Relationship.
The Company is not by the Plan or this Agreement obligated to
continue the Participant as an employee, director or consultant
of the Company or an Affiliate.
4
The Participant acknowledges: (i) that the Plan is
discretionary in nature and may be suspended or terminated by
the Company at any time; (ii) that the grant of the Shares
is a one-time benefit which does not create any contractual or
other right to receive future grants of shares, or benefits in
lieu of shares; (iii) that all determinations with respect
to any such future grants, including, but not limited to, the
times when shares shall be granted, the number of shares to be
granted, the purchase price, and the time or times when each
share shall be free from a lapsing repurchase right, will be at
the sole discretion of the Company; (iv) that the
Participant’s participation in the Plan is voluntary;
(v) that the value of the Shares is an extraordinary item
of compensation which is outside the scope of the
Participant’s employment contract, if any; and
(vi) that the Shares are not part of normal or expected
compensation for purposes of calculating any severance,
resignation, redundancy, end of service payments, bonuses,
long-service awards, pension or retirement benefits or similar
payments.
9. Notices. Any notices required or permitted
by the terms of this Agreement or the Plan shall be given by
recognized courier service, facsimile, registered or certified
mail, return receipt requested, addressed as follows:
| If to the Company: |
| Alloy, Inc. | |
| 000 X. 00xx Xxxxxx | |
| 00xx Xxxxx | |
| Xxx Xxxx, XX 00000 | |
| Attention: Chief Executive Officer |
| If to the Participant: |
or to such other address or addresses of which notice in the
same manner has previously been given. Any such notice shall be
deemed to have been given on the earliest of receipt, one
business day following delivery by the sender to a recognized
courier service, or three business days following mailing by
registered or certified mail.
10. Benefit of Agreement. Subject to the
provisions of the Plan and the other provisions hereof, this
Agreement shall be for the benefit of and shall be binding upon
the heirs, executors, administrators, successors and assigns of
the parties hereto.
11. Governing Law. This Agreement shall be
construed and enforced in accordance with the laws of the State
of Delaware, without giving effect to the conflict of law
principles thereof. For the purpose of litigating any dispute
that arises under this Agreement, whether at law or in equity,
the parties hereby consent to exclusive jurisdiction in New York
and agree that such litigation shall be conducted in the courts
of New York, New York or the federal courts of the United States
for the Southern District of New York.
12. Severability. If any provision of this
Agreement is held to be invalid or unenforceable by a court of
competent jurisdiction, then such provision or provisions shall
be modified to the extent necessary to make such provision valid
and enforceable, and to the extent that this is impossible, then
such provision shall be deemed to be excised from this
Agreement, and the validity, legality and enforceability of the
rest of this Agreement shall not be affected thereby.
13. Entire Agreement. This Agreement,
together with the Plan, constitutes the entire agreement and
understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior oral or written
agreements and understandings relating to the subject matter
hereof. No statement, representation, warranty, covenant or
agreement not expressly set forth in this Agreement shall affect
or be used to interpret, change or restrict the express terms
and provisions of this Agreement provided, however, in any
event, this Agreement shall be subject to and governed by the
Plan.
14. Modifications and Amendments; Waivers and
Consents. The terms and provisions of this Agreement may
be modified or amended as provided in the Plan. Except as
provided in the Plan, the terms and provisions of this Agreement
may be waived, or consent for the departure therefrom granted,
only by written document executed by the party entitled to the
benefits of such terms or provisions. No such waiver or consent
shall be deemed to be or shall constitute a waiver or consent
with respect to any other terms or provisions of
5
this Agreement, whether or not similar. Each such waiver or
consent shall be effective only in the specific instance and for
the purpose for which it was given, and shall not constitute a
continuing waiver or consent.
15. Consent of Spouse. If the Participant is
married as of the date of this Agreement, the Participant’s
spouse shall execute a Consent of Spouse in the form of
Exhibit A hereto, effective as of the date hereof. Such
consent shall not be deemed to confer or convey to the spouse
any rights in the Granted Shares that do not otherwise exist by
operation of law or the agreement of the parties. If the
Participant marries or remarries subsequent to the date hereof,
the Participant shall, not later than 60 days thereafter,
obtain his or her new spouse’s acknowledgement of and
consent to the existence and binding effect of all restrictions
contained in this Agreement by such spouse’s executing and
delivering a Consent of Spouse in the form of Exhibit A.
16. Counterparts. This Agreement may be
executed in one or more counterparts, and by different parties
hereto on separate counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and
the same instrument.
17. Data Privacy. By entering into this
Agreement, the Participant: (i) authorizes the Company and
each Affiliate, and any agent of the Company or any Affiliate
administering the Plan or providing Plan record keeping
services, to disclose to the Company or any of its Affiliates
such information and data as the Company or any such Affiliate
shall request in order to facilitate the grant of Shares and the
administration of the Plan; (ii) waives any data privacy
rights he or she may have with respect to such information; and
(iii) authorizes the Company and each Affiliate to store
and transmit such information in electronic form.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
6
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
| ALLOY, INC. |
| By: |
|
|
|
| Name: |
| Title: |
| PARTICIPANT: | |
|
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|
| Print name: |
7
Exhibit A
CONSENT OF SPOUSE
I, ,
spouse
of ,
acknowledge that I have read the RESTRICTED STOCK AGREEMENT
dated as
of ,
200 (the “Agreement”) to which this Consent is
attached as Exhibit A and that I know its contents.
Capitalized terms used and not defined herein shall have the
meanings assigned to such terms in the Agreement. I am aware
that by its provisions the Granted Shares granted to my spouse
pursuant to the Agreement are subject to a Lapsing Repurchase
Right in favor of Alloy, Inc. (the “Company”) and
that, accordingly, the Company has the right to repurchase up to
all of the Granted Shares of which I may become possessed as a
result of a gift from my spouse or a court decree and/or any
property settlement in any domestic litigation.
I hereby agree that my interest, if any, in the Granted Shares
subject to the Agreement shall be irrevocably bound by the
Agreement and further understand and agree that any community
property interest I may have in the Granted Shares shall be
similarly bound by the Agreement.
I agree to the Lapsing Repurchase Right described in the
Agreement and I hereby consent to the repurchase of the Granted
Shares by the Company and the sale of the Granted Shares by my
spouse or my spouse’s legal representative in accordance
with the provisions of the Agreement. Further, as part of the
consideration for the Agreement, I agree that at my death, if I
have not disposed of any interest of mine in the Granted Shares
by an outright bequest of the Granted Shares to my spouse, then
the Company shall have the same rights against my legal
representative to exercise its rights of repurchase with respect
to any interest of mine in the Granted Shares as it would have
had pursuant to the Agreement if I had acquired the Granted
Shares pursuant to a court decree in domestic litigation.
I AM AWARE THAT THE LEGAL, FINANCIAL AND RELATED MATTERS
CONTAINED IN THE AGREEMENT ARE COMPLEX AND THAT I AM FREE TO
SEEK INDEPENDENT PROFESSIONAL GUIDANCE OR COUNSEL WITH RESPECT
TO THIS CONSENT. I HAVE EITHER SOUGHT SUCH GUIDANCE OR COUNSEL
OR DETERMINED AFTER REVIEWING THE AGREEMENT CAREFULLY THAT I
WILL WAIVE SUCH RIGHT.
Dated as of
the day
of ,
200 .
|
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| Print name: |
A-1
Exhibit B
Election to Include Gross Income in Year
of Transfer Pursuant to Section 83(b)
of the Internal Revenue Code of 1986, as amended
In accordance with Section 83(b) of the Internal Revenue
Code of 1986, as amended (the “Code”), the undersigned
hereby elects to include in his gross income as compensation for
services the excess, if any, of the fair market value of the
property (described below) at the time of transfer over the
amount paid for such property.
The following sets for the information required in accordance
with the Code and the regulations promulgated hereunder:
1. The name, address and social security number of the
undersigned are:
| Name: | |
| Address: | |
| Social Security No.: |
2. The description of the property with respect to which
the election is being made is as follows:
| ( ) shares (the “Shares”) of Common Stock, $.01 par value per share, of Alloy, Inc., a Delaware corporation (the “Company”). |
3. This election is made for the calendar
year ,
with respect to the transfer of the property to the Taxpayer
on .
4. Description of restrictions: The property is subject to
the following restrictions:
| If taxpayer’s employment with the Company or an Affiliate is terminated, the Company may repurchase all or any portion of the Shares determined as set forth below at the acquisition price paid by the taxpayer: |
| A. If the termination takes place on or prior to , the Purchase Option will apply to all of the Shares. | |
| B. If the termination takes place after , 200 , the number of Shares to which the Purchase Option applies shall be ( ) Shares less ( ) Shares for each full twelve (12) month period elapsed after , 200 if the taxpayer is employed by the Company or an Affiliate. |
5. The fair market value at time of transfer (determined
without regard to any restrictions other than restrictions which
by their terms will never lapse) of the property with respect to
which this election is being made was not more than
$ per
Share.
6. The amount paid by taxpayer for said property was
$ per
Share.
7. A copy of this statement has been furnished to the
Company.
Signed
this day
of ,
200 .
|
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| Print Name: |
B-1
