RESTRICTED STOCK AWARD AGREEMENT RELATING TO THE AEROGROW INTERNATIONAL, INC.
EXHIBIT
10.6
RELATING
TO THE
2005
EQUITY COMPENSATION PLAN
THIS
RESTRICTED STOCK AWARD AGREEMENT, dated as of this ______ day of _____________
2005 (the "Agreement"), is between AeroGrow International, Inc., a Nevada
corporation (the "Company"), and __________________ ("Grantee").
RECITALS
WHEREAS,
the Company has awarded Grantee certain shares of the authorized but unissued
common stock, $0.001 par value, of the Company (the "Common Stock") pursuant
to
the terms of the AeroGrow International, Inc. 2005 Equity Compensation Plan
(the
"Plan"); and
WHEREAS,
the Plan contemplates a written document evidencing the award;
NOW,
THEREFORE, for and in consideration of the promises and the mutual covenants
contained in this Agreement, the parties agree as follows:
SECTION
1
AWARD
OF SHARES
1.1 Award.
Pursuant to the terms of the Plan, Grantee is hereby awarded ________ shares
("Shares") of the Common Stock, effective ______________, 2005 ("Effective
Date").
1.2 Delivery
of Certificates.
Any
certificates representing the Shares hereunder shall be held in escrow by
the
Secretary of the Company as provided in Section 4 hereof.
1.3 Stockholder
Right.
Until
such time as any or all of the Shares are forfeited pursuant to the terms
of
this Agreement, if ever, Grantee (or any successor in interest) shall have
all
the rights of a stockholder (including voting rights) with respect to the
Shares, including Shares held in escrow under Section 4, subject, however,
to
the transfer restrictions of Section 2.
SECTION
2
TRANSFER
RESTRICTIONS
2.1 Restriction
on Transfer.
Grantee
shall not transfer, assign, encumber or otherwise dispose of any Unvested
Shares
(as defined below) at any time.
2.2 Disposition
of Shares.
Grantee
hereby agrees that Grantee shall make no disposition of the Vested Shares
(as
defined below) unless and until Grantee:
a. shall
have notified the Company of the proposed disposition and provided a written
summary of the terms and conditions of the proposed disposition;
and
b. shall
have complied with all requirements of this Agreement applicable to the
disposition of the Shares.
The
Company shall not be required (i) to transfer on its books any Shares which
have
been sold or transferred in violation of the provisions of this Section 2,
nor
(ii) to treat as the owner of the Shares, or otherwise to accord voting or
dividend rights to, any transferee to whom the Shares have been transferred
in
contravention of this Agreement. Grantee agrees to pay the Company's reasonable
expenses incurred in connection with any disposition of the Shares.
2.3 Restrictive
Legends.
In
order to reflect the restrictions on disposition of the Shares, the stock
certificates for the Shares will be endorsed with the following restrictive
legend:
THE
SECURITIES REPRESENTED HEREBY ARE SUBJECT TO, AND MAY BE TRANSFERRED ONLY
IN
COMPLIANCE WITH, THAT CERTAIN RESTRICTED STOCK AWARD AGREEMENT, DATED AS
OF
____________, 2005, BETWEEN THE COMPANY AND THE HOLDER OF THESE
SECURITIES.
SECTION
3
FORFEITURE
OF UNVESTED SHARES
3.1 Forfeiture.
Upon
termination of Grantee's employment or consulting arrangement with the Company,
for any reason, all or any portion of Grantee's Shares in which Grantee has
not
acquired a vested interest in accordance with Section 3.2 (such shares to
be
hereinafter called the "Unvested Shares") will be forfeited and Grantee shall
have no further rights with respect to such Unvested Shares.
3.2 Vesting.
Unvested Shares shall cease to be Unvested Shares and shall cease to be subject
to forfeiture, and Grantee shall thereupon acquire a vested interest therein
(such shares to be hereinafter called the "Vested Shares") on a pro rata
basis
each month based on the actual number of hours worked from the Effective
Date
through ______________, 200__.
3.3 Additional
Shares or Substituted Securities.
In the
event of any stock dividend, stock split, recapitalization or other change
affecting the Company's outstanding Common Stock as a class effected without
receipt of consideration, then any new, substituted, or additional securities
or
other property (including money paid other than as a regular cash dividend)
which is by reason of any such transaction distributed with respect to the
Shares (the “Distributed Property”) shall be immediately subject to forfeiture
as provided in this Section 3, but only to the extent the Shares are at the
time
subject to forfeiture. Appropriate adjustments to reflect the distribution
of
such Distributed Property shall be made to the number of Shares
hereunder.
SECTION
4
ESCROW
FOR UNVESTED SHARES
4.1 Deposit.
Upon
issuance, the certificates for the Unvested Shares shall be deposited in
escrow
with the Company to be held in accordance with the provisions of this Section
4.
The deposited certificates, together with any other assets or securities
from
time to time deposited with the Company pursuant to the requirements of this
Agreement, shall remain in escrow until such time or times as the certificates
(or other assets and securities) are to be released or otherwise surrendered
for
cancellation in accordance with subsection 4.3.
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4.2 Recapitalization.
Any
cash dividends on the Shares (or other securities at the time held in escrow)
shall be paid directly to Grantee and shall not be held in escrow. However,
any
Distributed Property shall be immediately delivered to the Company to be
held in
escrow under this Section 4, but only to the extent the Shares are at the
time
subject to the escrow requirements of subsection 4.1.
4.3 Release/Surrender.
The
Shares, together with the Distributed Property and any other assets or
securities held in escrow hereunder, shall be subject to the following terms
and
conditions relating to their release from escrow or their surrender to the
Company for repurchase and cancellation:
(i) Should
Grantee's Unvested Shares be forfeited as provided in subsection 3.1 hereof,
then the escrowed certificates for such Unvested Shares (together with any
other
assets or securities issued with respect thereto) shall be delivered to the
Company for cancellation, and Grantee shall cease to have any further rights
or
claims with respect to such Unvested Shares (or other assets or
securities).
(ii) As
the
interest of Grantee in Shares (or any other assets or securities issued with
respect thereto) vests in accordance with the provisions of Schedule I, the
certificates for such Vested Shares (as well as all other vested assets and
securities) shall be released promptly from escrow and delivered to
Grantee.
SECTION
5
SPECIAL
TAX ELECTION
5.1 Section
83(b) Election.
Grantee
understands that under Section 83 of the Internal Revenue Code of 1986, as
amended (the "Code"), the fair market value of the Shares on the date any
forfeiture restrictions applicable to such Shares lapse will be reportable
as
ordinary income to Grantee in the tax year in which such restrictions lapse.
For
this purpose, the term "forfeiture restrictions" includes the automatic
forfeiture of Unvested Shares as provided in subsection 3.1 hereof. Grantee
understands, however, that he may elect to be taxed at the time the Shares
are
acquired hereunder, rather than when and as such Shares cease to be subject
to
such forfeiture restrictions, by filing an irrevocable election under Section
83(b) of the Code with the Internal Revenue Service within thirty (30) days
after the date of this Agreement. If this irrevocable election is made, Grantee
will be taxed on the fair market value of the Shares as of the date of this
Agreement (determined without taking into account any forfeiture restrictions).
The form for making this irrevocable election is attached as Exhibit
A
hereto.
In the event that Grantee makes this irrevocable election, and Grantee's
Unvested Shares are forfeited pursuant to subsection 3.1 hereof, Grantee
will
not be entitled to deduct the income, if any, previously recognized as income
with respect to those shares as a result of the election. Grantee understands
that failure to make this filing within the thirty (30) day period will result
in the recognition of ordinary income by Grantee as the forfeiture restrictions
lapse. GRANTEE ACKNOWLEDGES THAT IT IS GRANTEE'S SOLE RESPONSIBILITY, AND
NOT
THE COMPANY'S, TO FILE A TIMELY ELECTION UNDER SECTION 83(b), EVEN IF GRANTEE
REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON SUCH
GRANTEE'S BEHALF.
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This
summary is necessarily incomplete, and the tax laws and regulations are subject
to change. Grantee should consult a tax advisor before making an election
under
Section 83(b) of the Code.
SECTION
6
GENERAL
PROVISIONS
6.1 No
Employment or Service Contract.
Nothing
in this Agreement shall confer upon Grantee any right to employment with
the
Company.
6.2 Notices.
All
notices, requests, demands, and other communications under this Agreement
shall
be in writing and shall be deemed to have been duly given on the date of
service
if served personally on the party to whom notice is to be given, on the date
of
transmittal of service via telecopy to the party to whom notice is to be
given
(with a confirming copy being delivered within 24 hours thereafter), or on
the
third day after mailing if mailed to the party to whom notice is to be given,
by
first class mail, registered or certified, postage prepaid, or via overnight
courier providing a receipt and properly addressed. Notices to the Company
shall
be addressed to AeroGrow International, Inc., 000 00xx Xxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxx 00000, Attention: Secretary. Notices to Grantee shall be
sent
to the latest address of Grantee shown on the records of the Company. Any
party
may change its address for purposes of this section by giving notice of the
new
address to each of the other parties in the manner set forth above.
6.3 No
Waiver.
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.
6.4 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Colorado for all purposes and in all respects, without giving effect
to
the conflict of law provisions thereof.
6.5 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed to be an original and enforceable against the parties actually executing
such counterparts, but all of which together shall constitute one and the
same
instrument.
6.6 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 Grantee and Grantee's legal
representatives, heirs, legatees, distributees, assigns and transferees by
operation of law, 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 and conditions hereof.
6.7 Integration;
Amendment.
This
Agreement, the Plan and the other documents delivered pursuant hereto constitute
the full and entire understanding and agreement among the parties with regard
to
the subjects hereof and thereof, and supersede any previous agreement or
understanding between or among the parties with respect to such subjects.
No
party shall be liable or bound to any other party in any manner by any
warranties, representations or covenants except as specifically set forth
herein
or therein. Except as expressly provided herein neither this Agreement nor
any
term hereof may be amended, waived, discharged or terminated other than by
a
written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought.
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6.8 Severability.
In the
event that any provision of this Agreement becomes or is declared by a court
of
competent jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision; provided
that no
such severability shall be effective if it materially changes the economic
benefit of this Agreement to any party.
6.9 Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used for convenience only
and
are not considered in construing or interpreting this Agreement.
IN
WITNESS WHEREOF, the parties have executed this Agreement on the day and
year
first indicated above.
| AEROGROW INTERNATIONAL, INC. | |||
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By:
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Name:
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Title:
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| GRANTEE: | |||
| Signature: |
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Name:
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EXHIBIT
A
SECTION
83(B) TAX ELECTION
This
statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
(1) The
taxpayer who performed the services is:
Name:
Address:
Taxpayer
Social Security No.:
Taxable
Year: Calendar Year ________
(2) The
property
with respect to which the election is being made is _______ shares of the
common
stock, par value $0.00l per share, of AeroGrow International, Inc. (the
"Unvested Shares").
(3) The
Unvested Shares were granted on ________, 2005.
(4) The
Unvested Shares are subject to forfeiture if for any reason taxpayer's services
with the issuer are terminated. The forfeiture restriction lapses in a series
of
installments.
(5) The
fair
market value at the time of transfer (determined without regard to any
restriction other than a restriction which by its terms will never lapse)
is
$_____ per share.
(6) The
amount paid for such Unvested Shares is $0.00 per share.
(7) A
copy of
this statement was furnished to AeroGrow International, Inc. for whom taxpayer
rendered the services underlying the transfer of the Unvested
Shares.
(8) This
statement is executed as of __________, 2005.
Spouse
(if any):
______________________________
Taxpayer:
_______________________________
