RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK
AGREEMENT ("Agreement") is dated the 6th day of
June, 2008, but effective as of April 1, 2007, by and between BASIC EARTH SCIENCE SYSTEMS,
INC. (the "Company"), a Delaware corporation, and _____________
(the "Board Member").
In consideration of the mutual
covenants hereinafter set forth and other good and valuable consideration, the
parties agree as follows:
1. Purpose. The
purpose of this Agreement is to partially compensate the Board Member for his
service on the Company's Board of Directors and to give him the incentive to be
an active and key participant in the growth of the Company, and among other
things, to provide guidance, strategies, introductions and decisions that steer
the Company in the best interest of the shareholders by providing him with the
opportunity to own common stock of the Company. This Agreement is in
conformance with the current director compensation plan refined through a series
of Board Meetings and documented in the Board meeting minutes of March 8, 2008
through April 12, 2008.
2. Stock
Ownership. In making this grant, the Board expects the Board
Member, within three years of the date he becomes a member of the Board of
Directors, to own an amount of common stock equal to one year of his average
total board compensation. Stock received from this grant may be used
to meet this requirement
3. Restricted
Stock Grant. Subject to the terms and conditions of this
Agreement including, without limitation, the provisions of Paragraph 4, the
Company hereby grants to the Board Member 22,713 restricted shares (the
"Shares") of the Company's common stock. Stock certificates
evidencing the Shares will contain a restrictive legend conspicuously noted on
the face thereof which shall state as follows:
This
certificate and the shares of stock represented hereby shall not vest until
April 1, _______. In addition, this certificate and the shares
of stock represented hereby are subject to the provisions of a Restricted Stock
Agreement dated June 6, 2008 whereby vesting of ownership of the shares
evidenced by this certificate are set forth and a corresponding risk of
forfeiture is set forth. A copy of said Restricted Stock Agreement is on file at
the registered office of the Company where it may be inspected with proper
authorization.
In addition to the foregoing, the
certificate evidencing the Shares shall contain an investment restrictive legend
conspicuously noted on the face thereof which identifies that the Shares are
unregistered and may not be transferred except upon an effective registration
statement or in compliance with the requirements of Rule144 as
promulgated under the Securities Act of 1933, as amended.
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4. Vesting
and Risk of Forfeiture. The Board Member is expected to remain
as a member of the Company’s Board of Directors and carry out, to the best of
his abilities, the duties of this position along with any committee chairmanship
and/or committee member assignments. If the
Board
Member's participation as a member of the Board of Directors ceases or is
terminated for any reason prior to the date the Shares are fully vested in
accordance with this Paragraph, the unvested portion of the Shares shall be
automatically forfeited and reassigned to the Company. The Board Member shall
vest in the Shares as set forth in the following table if the Board Member has
continuously remained as a member of the Board of Directors from the effective
date of this Agreement through the respective date(s) set forth in the
table:
April 1,
2008 7,571
shares shall be vested (33.333%)
April 1,
2009 7,571
shares shall be vested (33.333%)
April 1,
2010 7,571
shares shall be vested (33.333%)
In addition, the Shares shall be fully
vested in the Board Member upon (i) the closing of any merger, combination,
consolidation or similar business transaction involving the Company in which the
holders of common stock of the Company immediately prior to such transaction are
not the holders of a majority of the ordinary voting securities of the surviving
corporation in such transaction; (ii) the closing of any sale by the Company of
all or substantially all of its assets to an acquiring corporation in which the
holders of the common stock of the Company immediately prior to such closing are
not the holders of a majority of the ordinary voting securities of the acquiring
entity; or (iii) the closing of any sale by the holders of the common stock of
the Company to someone other than a current holder of common stock of the
Company of an amount of common stock that equals or exceeds a majority of the
common stock outstanding immediately prior to such closing.
5. Board
Member's Representations. The Board Member hereby makes the
following representations and warranties to the Company:
(a) The
Board Member understands that this Agreement has important tax consequences for
Board Member, and that he/she will be subject to income and potentially
employment taxes upon the vesting of the Shares, based on the value of the
Shares at each such date, and that the payment of such taxes is Board Member's
sole responsibility. Board Member understands the Company may be required to
withhold customary withholding and other employment taxes with respect to the
Shares from Board Member's compensation. Board Member acknowledges that this
Agreement was prepared by legal counsel to the Company. Board Member
acknowledges that he has been advised and Board Member has had the opportunity
to seek independent legal and tax advice regarding this Agreement.
(b) Board
Member has evaluated the risks of investing in the stock of the Corporation and
has been given the opportunity to ask questions of and receive answers from the
Company concerning the terms and conditions of this Agreement, and to obtain
additional information necessary to verify the accuracy of the information Board
Member desired in order to evaluate his investment.
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(c) Board
Member has the financial ability to bear the economic risk of his investment in
the Shares, has adequate means of providing for his current needs and personal
contingencies, and has no need for liquidity in his investment in the
Shares.
(d) In
making the decision to accept the award of Shares granted herein, Board Member
has relied solely upon independent investigations made by him or on his
behalf.
(e) The
Shares will be acquired by Board Member in good faith solely for his own
account, for investment purposes only, and are not being acquired with a view
to, or for, the resale, distribution, subdivision or fractionalization
thereof. The Board Member understands that the Shares are an
investment that involves ordinary and customary risk and Board Member may lose
his entire investment.
(f) The
Board Member understands that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Act"), and agrees that the Shares may
not be sold, offered for sale, transferred, pledged, hypothecated or otherwise
disposed of except in compliance with the Act. Board Member has been advised
that Company has no obligation, and does not intend, to cause the Shares issued
herein to be registered under the Act, or to comply with any exemption under the
Act that would permit the Shares to be sold by the Board Member. Board Member
understands that the legal consequences of the foregoing mean that the Board
Member must bear the economic risk of Board Member's investment in the Company's
stock for an indefinite period of time. Board Member further understands that,
if Board Member desires to sell or transfers all or any part of the Shares,
Company may require Board Member's counsel to provide a legal opinion that the
transfer may be made without registration under the Act. In addition, Board
Member agrees that the Shares hereby accepted are subject to the restrictions on
transfer as described herein.
The foregoing representations and
warranties are made by Board Member with the intent that they be relied upon by
the Company in determining Board Member's suitability as a grantee of stock
awards pursuant to this Agreement. In addition, Board Member agrees to notify
the Company immediately of any change in any representation, warranty or other
information that relates to the Board Member.
6. Termination
of Agreement. This Agreement shall terminate only upon the
written agreement of Board Member and Company to so terminate the
Agreement.
7. Not an
Employment Agreement. This Agreement is not an employment
agreement and it shall not constitute evidence of any understanding that Company
will employ, or seek to employ, Board Member for any period of
time.
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8. Compliance
with Law. If any provision of this Agreement becomes or is
found to be illegal, unenforceable, void, or voidable pursuant to applicable
laws, regulations, or restrictions, or for any other reason, such clause or
provision must first be modified to the extent necessary to make this Agreement
legal and enforceable and then if necessary, second, severed from the remainder
of the Agreement to allow the remainder of the Agreement to remain in full force
and effect.
9. General
Provisions.
(a) Survival
of Representations. All representations and warranties made
hereunder shall survive this Agreement.
(b) Notices. Any
notices required or permitted to be given hereunder shall be sufficient if in
writing and if sent by certified or registered mail to the last known address of
either party.
(c) Waiver of
Breach. The waiver by any party of a breach of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party.
(d) Binding
Effect. This Agreement shall be binding upon the parties
hereto and their respective personal representatives, successors and
assigns.
(e) Attorneys'
Fees. Should any party hereto retain counsel for the purpose of enforcing
or preventing breach of any provision hereof, then the prevailing party shall be
entitled to be reimbursed by the losing party for all costs and expenses
incurred thereby including, but not limited to, reasonable attorneys'
fees.
(f) Venue and
Jurisdiction. Venue and jurisdiction for any legal action
arising under this Agreement shall be in the City and County of Denver, State of
Colorado, or any other location mutually agreed to by the parties.
(g) Entire
Agreement. This instrument contains the entire agreement of
the parties with respect to the subject matter hereof and it may not be changed
orally but only by a written agreement signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought.
(h) Interpretation.
This Agreement shall be interpreted and construed in accordance with the laws of
the State of Colorado.
(i) Counterparts. This
Agreement may be executed in counterparts, but such counterparts together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF the parties have
executed this Agreement as of the date first written above.
COMPANY: BOARD
MEMBER:
BASIC
EARTH SCIENCE SYSTEMS, INC.
By____________________________________ _____________________________________
Xxx
Xxxxxxxxx,
President Director
