ENTREMETRIX CORPORATION
RESTRICTED STOCK BONUS AGREEMENT
THIS ENTREMETRIX CORPORATION RESTRICTED STOCK BONUS AGREEMENT (this
"Agreement") is made this 28th day of October, 2004, by and between EntreMetrix
Corporation, a Nevada corporation (the "Company"), and, Xxx Xxxx, an individual
who is the recipient of an award of restricted common stock of the Company (the
"Recipient").
All capitalized terms in this Agreement shall have the meanings assigned
to them in this Agreement, or in the attached Appendix.
1. EXERCISE OF AWARD
1.1 AWARD. The Company hereby awards to the Recipient 2,000,000 restricted
shares of the Company's Common Stock (the "Restricted Shares").
1.2 CONSIDERATION. The consideration received by the Company for the
Restricted Shares consisted of extraordinary services rendered by the Recipient
to the Company and the continuing dedication of Recipient to the Company and its
business. Concurrent with the delivery of this Agreement to the Company, the
Recipient shall deliver any additional documents required by the Company as a
condition for the Award.
1.3 CONDITION OF AWARD. The Restricted Shares are subject to the following
vesting conditions:
The Restricted Shares shall vest upon the Company achieving audited gross
revenues of at least $50,000,000 for the fiscal year ended December 31, 2005. If
the Company does not achieve audited gross revenues of at least $50,000,000 for
the fiscal year ended December 31, 2005, then a pro rata portion of the
Restricted Shares shall vest based upon the following formula: $ amount of
audited gross revenues achieved for the fiscal year ended December 31,
2005/$50,000,000 X 2,000,000. The vesting date, if any, shall be the date of the
audit report prepared by the Company's auditors with respect to the Company's
fiscal year ended December 31, 2005 (the "Audit Report Date").
The Company shall hold the Restricted Shares in escrow pending
satisfaction of the foregoing vesting conditions. As and when the vesting
conditions are satisfied, the vested Restricted Shares shall be released to the
Recipient. All Restricted Shares that do not vest by the Audit Report Date shall
be automatically rescinded and cancelled without any further action by the
Recipient required.
1.4 SHAREHOLDER RIGHTS. The Recipient (or any successor in interest) shall
have all the rights of a shareholder (including voting, dividend and liquidation
rights) with respect to the Restricted Shares, subject, however, to the transfer
restrictions of Sections 2 and 3 below, except to the extent the Restricted
Shares are rescinded and cancelled in accordance with Section 1.3.
2. SECURITIES LAW COMPLIANCE
2.1 RESTRICTED SECURITIES. The Restricted Shares have not been registered
under the Securities Act of 1933 (the "Act") and are being issued to the
Recipient in reliance upon one or more exemptions from registration provided
under the Act. The Recipient hereby confirms that the Recipient has been
informed that the Restricted Shares are restricted securities under the Act and
may not be resold or transferred unless the Restricted Shares are first
registered under the federal securities laws or unless an exemption from such
registration is available.
2.3 RESTRICTIVE LEGENDS. The stock certificates for the Restricted Shares
shall be endorsed with one or more of the following restrictive legends:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The shares may not be
sold or offered for sale or otherwise transferred in the absence of
(a) an effective registration statement for the shares under such
Act, or (b) an opinion of counsel of the Company that registration
under such Act is not required with respect to such sale or offer."
"The shares represented by this certificate are subject to certain
restrictions on transfer, a right of first refusal, a lock-up
agreement, and certain drag-along rights granted to the Company and
accordingly may not be sold, assigned, transferred, encumbered, or
in any manner disposed of except in conformity with the terms of the
Restricted Stock Bonus Agreement between the Company and the
registered holder of the shares (or the predecessor in interest to
the shares). A copy of such agreement is maintained at the Company's
principal corporate offices."
2.4 INVESTMENT REPRESENTATIONS.
The Recipient hereby makes all of the representations set forth on
Exhibit B attached hereto, which are incorporated by reference herein.
3. TRANSFER RESTRICTIONS
3.1 RESTRICTION ON TRANSFER. The Restricted Shares shall not be
transferred, assigned, encumbered or otherwise disposed of in contravention of
the First Refusal Right, the Market Stand-Off, the Drag-Along Right or the
Lock-Up Agreement. Unvested Restricted Shares shall not be transferred,
encumbered or otherwise disposed of in any manner whatsoever. The Company
reserves the right to refuse any transfers that are not made in accordance with
this Agreement.
3.2 TRANSFEREE OBLIGATIONS. Each person (other than the Company) to whom
the Restricted Shares are transferred by means of a Permitted Transfer or
transfer in a private sale made pursuant to an exemption from registration
requirements must, as a condition precedent to the validity of such transfer,
acknowledge in writing to the Company that such person is bound by the
provisions of this Agreement and that the transferred shares are subject to the
First Refusal Right, the Market Stand-Off, the Drag-Along Right and the Lock-Up
Agreement, to the same extent such shares would be so subject if retained by the
Recipient.
2
3.3 MARKET STAND-OFF. In connection with any registration by the Company
of its equity securities (except on Form S-8 or S-4 or any successor forms
thereto), the Recipient shall not sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise dispose
of or transfer for value or otherwise agree to engage in any of the foregoing
transactions with respect to, any Restricted Shares without the prior written
consent of the Company or its underwriters. Such restriction (the "Market
Stand-Off") shall be in effect for such period of time from and after the
effective date of the final prospectus for the offering as may be requested by
the Company or such underwriters. In no event, however, shall such period exceed
one hundred eighty (180) days and the Market Stand-Off shall in all events
terminate five (5) years after the date of this Agreement. Any new, substituted
or additional securities which are by reason of any Recapitalization or
Reorganization distributed with respect to the Restricted Shares shall be
immediately subject to the Market Stand-Off, to the same extent the Restricted
Shares are at such time covered by such provisions. In order to enforce the
Market Stand-Off, the Company may impose stop-transfer instructions with respect
to the Restricted Shares until the end of the applicable stand-off period.
4. RIGHT OF FIRST REFUSAL
4.1 GRANT. The Company is hereby granted the right of first refusal (the
"First Refusal Right"), exercisable in connection with any proposed transfer of
the Restricted Shares except open market sales made in accordance with the
Lock-Up Agreement and applicable federal securities laws. For purposes of this
Section, the term "transfer" shall include any private sale, assignment, pledge,
encumbrance or other disposition of the Restricted Shares intended to be made by
the Recipient, but shall not include any Permitted Transfer or any open market
sale made in accordance with the Lock-Up Agreement.
4.2 NOTICE OF INTENDED DISPOSITION. In the event the Recipient desires to
accept a bona fide third-party offer for the transfer in a private sale of any
or all of the Restricted Shares (the Restricted Shares subject to such offer to
be hereinafter referred to as the "Target Shares"), the Recipient shall promptly
(i) deliver to the Company written notice (the "Disposition Notice") of the
terms of the offer, including the purchase price and the identity of the
third-party offeror, and (ii) provide satisfactory proof that the disposition of
the Target Shares to such third-party offeror would not be in contravention of
the provisions set forth in Sections 2 and 3. The transfer of such shares shall
not occur unless the transferee agrees in writing to be bound by the terms of
this Agreement, including, without limitation, the First Refusal Right, the
Market Stand-Off, the Drag-Along Right and the Lock-Up Agreement.
4.3 EXERCISE OF THE FIRST REFUSAL RIGHT. The Company shall, for a period
of twenty-five (25) days following receipt of the Disposition Notice, have the
right to repurchase any or all of the Target Shares subject to the Disposition
Notice upon the same terms as those specified therein or upon such other terms
(not materially different from those specified in the Disposition Notice) to
which the Recipient consents, except that the Company shall in any case have the
right to elect the payment method provided in Section 6. Such right shall be
exercisable by delivery of written notice (the "Exercise Notice") to the
Recipient prior to the expiration of the twenty-five (25) day exercise period.
If such right is exercised with respect to all the Target Shares, then the
Company shall effect the repurchase of such shares, including payment of the
purchase price, subject to the provisions of Section 6, not more than fifteen
(15) business days after delivery of the Exercise Notice, and at such time the
certificates representing the Target Shares shall be delivered to the Company.
If the purchase price specified in the Disposition Notice is to be payable in
property other than cash or evidences of indebtedness, and there is no
immediately ascertainable market value of such property, then the value of such
property shall be deemed to be zero.
3
4.4 NON-EXERCISE OF THE FIRST REFUSAL RIGHT. In the event the Exercise
Notice is not given to the Recipient prior to the expiration of the twenty-five
(25) day exercise period, the Recipient shall have a period of thirty (30) days
thereafter in which to sell or otherwise dispose of the Target Shares to the
third-party offeror identified in the Disposition Notice upon terms (including
the purchase price) no more favorable to such third-party offeror than those
specified in the Disposition Notice; provided, however, that any such sale or
disposition must not be effected in contravention of the provisions of Sections
2 and 3. In the event the Recipient does not effect such sale or disposition of
the Target Shares within the specified thirty (30) day period, the First Refusal
Right shall continue to be applicable to any subsequent disposition of the
Target Shares by the Recipient until such right lapses.
4.5 PARTIAL EXERCISE OF THE FIRST REFUSAL RIGHT. In the event the Company
makes a timely exercise of the First Refusal Right with respect to a portion,
but not all, of the Target Shares specified in the Disposition Notice, the
Recipient shall have the option, exercisable by written notice to the Company
delivered within five (5) business days after the Recipient's receipt of the
Exercise Notice, to effect the sale of the balance of the Target Shares to the
third-party offeror identified in the Disposition Notice, in full compliance
with the requirements of Section 4.4, as if the Company did not exercise the
First Refusal Right.
4.6 RECAPITALIZATION/REORGANIZATION. Any new, substituted or additional
securities or other property which is by reason of any Recapitalization
distributed with respect to the Restricted Shares shall be immediately subject
to the First Refusal Right, but only to the extent the Restricted Shares are at
the time covered by such right. In the event of a Reorganization, the First
Refusal Right shall remain in full force and effect and shall apply to the new
capital stock or other property received in exchange for the Restricted Shares
in consummation of the Reorganization, but only to the extent the Restricted
Shares are at the time covered by such right.
5. LOCK-UP AGREEMENT
Subject to Section 3.3, with respect to the Restricted Shares, Recipient
shall not sell in an open market or brokered transaction during any 30-day
period more than 15% of the total trading volume of the Company's common stock
reported by Bloomberg L.P. for the calendar month preceding the calendar month
in which such sale(s) shall occur (the "Lock-Up Agreement").
4
6. PAYMENT METHOD
At the election of the Company, the Company may pay the purchase price for
shares to be purchased pursuant to Section 4.2 to Recipient (or Recipient's
estate) with at least 10% down in cash with the balance of the purchase price
payable in equal monthly installments (principal plus interest) in accordance
with the terms of a promissory note payable to the order of Recipient amortized
over 36 months bearing simple interest at the then existing Bank of America
prime interest rate plus 1% per annum, with full privilege of prepayment of all
or any part of the principal at any time without penalty or bonus. The
promissory note shall provide that if a default occurs, at the election of the
holder the entire sum of principal and interest will immediately be due and
payable and that the Company shall pay reasonable attorneys' fees to the holder
if suit is commenced because of default. The promissory note shall be secured by
a pledge of all the shares being purchased in the transaction to which the
promissory note relates. As long as no default occurs in payments on the
promissory note, the Company shall be entitled to vote the shares; however, any
dividends shall be paid to the holder of the note as a prepayment of principal.
7. DRAG-ALONG RIGHT
In the event of the occurrence of a Corporate Transaction, the Company
shall have the right to require the Recipient to sell, transfer, exchange or
otherwise dispose of the Restricted Shares as part of the Corporate Transaction,
notwithstanding that the Recipient did not approve the Corporate Transaction
and/or did not otherwise consent to the sale, transfer, exchange or other
disposition of Recipient's securities in accordance with the terms of the
Corporate Transaction (the "Drag-Along Right"). For purposes of facilitating the
obligation to transfer set forth in this Section 7, the Company, in its sole
discretion, may require the Recipient, at the Company's cost, to deliver the
share certificates representing the Restricted Shares with a stock power
executed by the Recipient in blank, to the Secretary of the Company or the
Company's designee, to hold the Restricted Shares and the stock power in escrow
and to take all such actions and to effectuate all transfers or releases as are
in accordance with the terms of this Section 7. The Restricted Shares may be
held in escrow so long as they are subject to the terms of this Section 7. The
Recipient hereby irrevocably constitutes and appoints the Secretary of the
Company, with full power of substitution, as Recipient's true and lawful
attorney to act as escrow holder for the Recipient under this Section 7 and any
amendments to it. The power of attorney hereby granted is irrevocable and shall
be deemed to be coupled with an interest, and it shall survive the termination,
death, disability, or, if the Recipient is an entity, the dissolution of the
Recipient.
8. LAPSE OF FIRST REFUSAL RIGHT, MARKET STAND-OFF, DRAG-ALONG RIGHT AND
LOCK-UP AGREEMENT.
The First Refusal Right, the Drag-Along Right, the Market Stand-Off and
the Lock-Up Agreement shall lapse as to any Restricted Shares sold in accordance
with Section 5.
9. GENERAL PROVISIONS
9.1 ASSIGNMENT. The Company may assign any or all of its rights under this
Agreement to any person or entity selected by the Board, including (without
limitation) one or more shareholders of the Company.
5
9.2 NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement or in the
Plan shall confer upon the Recipient any right to continue in Service for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Company (or any Parent or Subsidiary employing or retaining
the Recipient) or of the Recipient, which rights are hereby expressly reserved
by each, to terminate the Recipient's Service at any time for any reason, with
or without cause.
9.3 NOTICES. Unless otherwise specifically provided in this Agreement, all
notices, demands, requests, consents, approvals or other communications
(collectively and severally called "Notices") required or permitted to be given
hereunder, or which are given with respect to this Agreement, shall be in
writing, and shall be given by: (A) personal delivery (which form of Notice
shall be deemed to have been given upon delivery), (B) by telegraph or by
private airborne/overnight delivery service (which forms of Notice shall be
deemed to have been given upon confirmed delivery by the delivery agency), (C)
by electronic or facsimile or telephonic transmission, provided the receiving
party has a compatible device or confirms receipt thereof (which forms of Notice
shall be deemed delivered upon confirmed transmission or confirmation of
receipt), or (D) by mailing in the United States mail by registered or certified
mail, return receipt requested, postage prepaid (which forms of Notice shall be
deemed to have been given upon the fifth {5th} business day following the date
mailed). Notices shall be addressed to the address set forth in the signature
page of this Agreement, or to such other address as the receiving party shall
have specified most recently by like Notice, with a copy to the other parties
hereto.
9.4 NO WAIVER. The failure of the Company in any instance to exercise the
First Refusal Right, or the Drag-Along Right shall not constitute a waiver of
any such rights that may subsequently arise under the provisions of this
Agreement or any other agreement between the Company and Recipient. No waiver of
any breach or condition of this Agreement shall be deemed to be a waiver of any
other or subsequent breach or condition, whether of like or different nature.
9.5 CANCELLATION OF SHARES. If the Company shall make available, at the
time and place and in the amount and form provided in this Agreement, the
consideration for the Restricted Shares to be repurchased in accordance with the
provisions of this Agreement, then from and after such time, the person from
whom such shares are to be repurchased shall no longer have any rights as a
holder of such shares (other than the right to receive payment of such
consideration in accordance with this Agreement). Such shares shall be deemed
purchased in accordance with the applicable provisions hereof, and the Company
shall be deemed the owner and holder of such shares, whether or not the
certificates therefor have been delivered as required by this Agreement.
10. MISCELLANEOUS PROVISIONS
10.1 RECIPIENT UNDERTAKING. The Recipient hereby agrees to take whatever
additional action and execute whatever additional documents the Company may deem
necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on either the Recipient or the Restricted
Shares pursuant to the provisions of this Agreement.
6
10.2 AGREEMENT IS ENTIRE CONTRACT. This Agreement constitutes the entire
contract between the parties hereto with regard to the subject matter hereof.
10.3 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Nevada without resort to that state's
conflict-of-laws rules.
10.4 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
10.5 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall inure
to the benefit of, and be binding upon, the Company and its successors and
assigns and upon the Recipient, the Recipient's permitted assigns and the legal
representatives, heirs and legatees of the Recipient's estate, whether or not
any such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms hereof.
[SIGNATURE PAGE FOLLOWS]
7
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first indicated above.
ENTREMETRIX CORPORATION, a Nevada corporation
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
RECIPIENT
---------------------------------------------
Xxx Xxxx
Address:
-------------------------------------
---------------------------------------------
---------------------------------------------
8
EXHIBIT A
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED ___________________ hereby sell(s), assign(s) and
transfer(s) unto EntreMetrix Corporation, a Nevada Corporation (the "Company"),
_____________ (_____) shares of the Common Stock of the Company standing in his
or her name on the books of the Company represented by Certificate No.
___________ herewith and do(es) hereby irrevocably constitute and appoint
______________ Attorney to transfer the said stock on the books of the Company
with full power of substitution in the premises.
Dated:
------------------
Signature
--------------------------------
Xxx Xxxx
Witness
------------------------------------------------------
INSTRUCTION: Please do not fill in any blanks other than the signature line.
Please sign exactly as you would like your name to appear on the issued stock
certificate. The purpose of this assignment is to enable the Company to exercise
the Drag-Along Right without requiring additional signatures on the part of
Recipient.
9
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
--------------------------------------------------------------------------------
In connection with the purchase of the Restricted Shares, I, the
undersigned Recipient, represent to the Company as follows:
1. The Company May Rely on These Representations. I understand that the
Company's sale of the shares to me has not been registered under the
Securities Act of 1933, as amended, because the Company believes, relying
in part on my representations in this document, that an exemption from
such registration requirement is available for such sale. I understand
that the availability of this exemption depends upon the representations I
am making to the Company in this document being true and correct.
2. I am Purchasing for Investment. I am purchasing the shares solely for
investment purposes, and not for further distribution. My entire legal and
beneficial ownership interest in the shares is being purchased and shall
be held solely for my account, except to the extent I intend to hold the
shares jointly with my spouse. I am not a party to, and do not presently
intend to enter into, any contract or other arrangement with any other
person or entity involving the resale, transfer, grant of participation
with respect to or other distribution of any of the shares. My investment
intent is not limited to my present intention to hold the shares for the
minimum capital gains period specified under any applicable tax law, for a
deferred sale, for a specified increase or decrease in the market price of
the shares, or for any other fixed period in the future.
3. I Can Protect My Own Interests. I can properly evaluate the merits and
risks of an investment in the shares and can protect my own interests in
this regard, whether by reason of my own business and financial expertise,
the business and financial expertise of certain professional advisors
unaffiliated with the Company with whom I have consulted, or my
preexisting business or personal relationship with the Company or any of
its officers, directors or controlling persons.
4. I am Informed About the Company. I am sufficiently aware of the Company's
business affairs and financial condition to reach an informed and
knowledgeable decision to acquire the shares. I have had opportunity to
discuss the plans, operations and financial condition of the Company with
its officers, directors or controlling persons, and have received all
information I deem appropriate for assessing the risk of an investment in
the shares.
5. I Recognize My Economic Risk. I realize that the purchase of the shares
involves a high degree of risk, and that the Company's future prospects
are uncertain. I am able to hold the shares indefinitely if required, and
am able to bear the loss of my entire investment in the shares.
6. I am Familiar With Rule 144. I am familiar with Rule 144 adopted under the
Securities Act, which in some circumstances permits limited public resales
of "restricted securities" like the shares acquired from an issuer in a
non-public offering. I understand that my ability to sell the shares under
Rule 144 in the future is uncertain, and will depend upon, among other
things: (i) the availability of certain current public information about
the Company; (ii) the resale occurring more than one year after my
purchase and full payment (within the meaning of Rule 144) for the shares;
and (iii) if I am an affiliate of the Company, or a non-affiliate who has
held the shares less than two years after my purchase and full payment:
(A) the sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker, as said term
is defined under the Securities Exchange Act of 1934, as amended, (B) the
amount of shares being sold during any three month period not exceeding
the specified limitations stated in Rule 144, and (C) timely filing of a
notice of proposed sale on Form 144, if applicable.
10
7. I Know Rule 144 May Never be Available. I understand that the requirements
of Rule 144 may never be met, and that the shares may never be saleable. I
further understand that at the time I wish to sell the shares, there may
be no public market for the Company's stock upon which to make such a
sale, or the current public information requirements of Rule 144 may not
be satisfied, either of which would preclude me from selling the shares
under Rule 144 even if the one-year minimum holding period had been
satisfied.
8. I Know I am Subject to Further Restrictions on Resale. I understand that
in the event Rule 144 is not available to me, any future proposed sale of
any of the shares by me will not be possible without prior registration
under the Securities Act, compliance with some other registration
exemption (which may or may not be available), or each of the following:
(i) my written notice to the Company containing detailed information
regarding the proposed sale, (ii) my providing an opinion of my counsel to
the effect that such sale will not require registration, and (iii) the
Company notifying me in writing that its counsel concurs in such opinion.
I understand that neither the Company nor its counsel is obligated to
provide me with any such opinion. I understand that although Rule 144 is
not exclusive, the Staff of the SEC has stated that persons proposing to
sell private placement securities other than in a registered offering or
pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such
offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.
9. I Know I May Have Tax Liability Due to the Uncertain Value of the Shares.
I understand that the Board of Directors believes its valuation of the
shares represents a fair appraisal of their worth, but that it remains
possible that, with the benefit of hindsight, the Internal Revenue Service
may successfully assert that the value of the shares on the date of my
purchase is substantially greater than the Board's appraisal. I understand
that any additional value ascribed to the shares by such an IRS
determination may constitute ordinary income to me as of the purchase
date, and that any additional taxes and interest due as a result will be
my sole responsibility payable only by me, and that the Company need not
and will not reimburse me for that tax liability.
11
10. Agreement. By signing below, I acknowledge my agreement with each of the
statements contained in this Investment Representation Statement as of the
date first set forth above, and my intent for the Company to rely on such
statements in issuing the shares to me.
-----------------------------
Xxx Xxxx
12
APPENDIX
The following definitions shall be in effect under the Agreement:
AGREEMENT shall mean this EntreMetrix Corporation Restricted Stock Bonus
Agreement.
RESTRICTED SHARES shall have the meaning assigned to such term in Section
1.l.
BOARD shall mean the Company's Board of Directors.
COMMON STOCK shall mean the Company's common stock.
CORPORATE TRANSACTION shall mean either of the following shareholder
approved transactions:
(i) a merger, consolidation or other transaction in which securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to such
transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the Company's assets in complete liquidation or dissolution of the
Company.
DISPOSITION NOTICE shall have the meaning assigned to such term in Section
4.2.
DRAG-ALONG RIGHT shall have the meaning assigned to such term in Section
7.
EXERCISE NOTICE shall have the meaning assigned to such term in Section
4.3.
FAIR MARKET VALUE of a share of Common Stock on any relevant date shall be
determined by the Board after taking into account such factors as it shall deem
appropriate.
FIRST REFUSAL RIGHT shall mean the right granted to the Company in
accordance with Section 4.
MARKET STAND-OFF shall mean the market stand-off restriction specified in
Section 3.3.
PARENT shall mean any company (other than the Company) in an unbroken
chain of companies ending with the Company, provided each company in the
unbroken chain (other than the Company) owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other companies in such chain.
PERMITTED TRANSFER shall mean (i) a gratuitous transfer of the Restricted
Shares, provided and only if Recipient obtains the Company's prior written
consent to such transfer, (ii) a transfer of title to the Restricted Shares
effected pursuant to Recipient's will or the laws of intestate succession
following Recipient's death or (iii) a transfer to the Company in pledge as
security for any purchase-money indebtedness incurred by Recipient in connection
with the acquisition of the Restricted Shares.
13
RECAPITALIZATION shall mean any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the Company's outstanding Common Stock as a class without the
Company's receipt of consideration.
REORGANIZATION shall mean any of the following transactions:
(i) a merger or consolidation in which the Company is not the
surviving entity,
(ii) a sale, transfer or other disposition of all or substantially
all of the Company's assets,
(iii) a reverse merger in which the Company is the surviving entity
but in which the Company's outstanding voting securities are transferred in
whole or in part to a person or persons different from the persons holding those
securities immediately prior to the merger, or
(iv) any transaction effected primarily to change the state in which
the Company is incorporated or to create a holding company structure.
SEC shall mean the Securities and Exchange Commission.
SERVICE shall mean the Recipient's performance of services for the Company
(or any Parent or Subsidiary) in the capacity of an employee, subject to the
control and direction of the employer entity as to both the work to be performed
and the manner and method of performance, a non-employee member of the Board of
Directors or an independent consultant.
SUBSIDIARY shall mean any company (other than the Company) in an unbroken
chain of companies beginning with the Company, provided each company (other than
the last company) in the unbroken chain owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other companies in such chain.
TARGET SHARES shall have the meaning assigned to such term in Section 4.2.
14
