EXHIBIT 10.2
COGNITRONICS CORPORATION
RESTRICTED STOCK AGREEMENT
This Agreement (this "Agreement") is made as of November 21, 2006 (the
"Date of Grant"), by and between Cognitronics Corporation, a New York
corporation (the "Company"), and Xxxx Xxxxxxxxxxx (the "Grantee") as a material
inducement to Grantee becoming a senior executive of the Company. The parties
acknowledge that this Agreement is subject to the filing and approval of an
Additional Listing Application with the American Stock Exchange and that the
issuance of the Restricted Shares (as defined below) is subject to such filing
and approval ("AMEX Approval").
1. Grant of Restricted Stock. Subject to and upon the terms, conditions, and
restrictions set forth in this Agreement, the Company hereby grants to the
Grantee, Seventy-Five Thousand (75,000) shares of common stock of the Company.
These shares are referred to in this Agreement as "Restricted Shares" during the
applicable Restriction Period (as defined in paragraph 4(c) hereof). Acceptance
of the Restricted Shares shall be deemed to be agreement by the Grantee to the
terms and conditions set forth in this Agreement. Certificates representing the
Restricted Shares may not be sold or otherwise transferred and must be held by
the Grantee until the end of the applicable Restriction Period. Until such terms
and conditions have lapsed with respect to any Restricted Shares, the
certificate for such shares will, at the Company's option, remain in the
physical possession of the Company or bear a legend to the effect that they were
issued or transferred subject to, and may be sold or otherwise disposed of only
in accordance with, the terms of this Agreement.
2. Stockholder Status. Effective upon the later of Date of Grant or the date of
AMEX Approval, the Grantee will be a holder of record of the Restricted Shares
and will have all rights of a stockholder with respect to such shares (including
the right to vote such shares at any meeting of stockholders of the Company and
the right to receive all dividends paid with respect to such shares), subject
only to the terms and conditions imposed by this Agreement.
3. Effect of Changes in Capitalization. The number of Restricted Shares are
subject to adjustment for stock splits, stock dividends and the like. Any
additional or different shares or securities issued as the result of such an
adjustment will be held or delivered in accordance with this Agreement and will
be deemed to be included within the term "Restricted Shares".
4. Lapse of Restrictions.
(a) The restrictions set forth in paragraph 5 below will lapse with
respect to 100% of the Restricted Shares on the earlier of: (i) the fourth
anniversary of the Date of Grant or (ii) the date the Company terminates the
employment of the Grantee without "Serious Cause" (as such term in defined in
the Employment Agreement of even date herewith between the Company and the
Grantee).
(b) Notwithstanding paragraph 4(a), the restrictions set forth in
paragraph 5 below will lapse on all of the Restricted Shares at the close of
business on the date on which a Change in Control of the Company (as defined
below in this paragraph 4(b)) shall occur. For purposes of this Agreement, a
"Change in Control" will occur (a) upon the public announcement that any
"person" (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (other than the Company,
any trustee or other fiduciary holding securities under an employee benefit plan
of the Company, or any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of the stock of the Company) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company's then outstanding securities, (b) if, during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Company's Board of Directors (the "Board"), and any new director (other than
a director designated by a person that has entered into an agreement with the
Company to effect a transaction described in clause (a), (c) or (d) of this
sentence) whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least 2/3 of the directors
then still in office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved, cease for
any reason to constitute at least a majority thereof, (c) if the stockholders of
the Company approve a merger or consolidation of the Company with any other
corporation, other than (i) 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) more than 75% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as defined above) acquires more than
30% of the combined voting power of the Company's then outstanding securities,
or (d) if the stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets.
(c) As soon as practicable after the restrictions with respect to any
installment of Restricted Shares lapse at the end of the period applicable to
such installment set forth in paragraphs 4(a) and 4(b) above (the "Restriction
Period"), the Company will deliver to the Grantee, or the Grantee's legal
representative in case of the Grantee's death, promptly after surrender of the
Grantee's certificate(s) for the Restricted Shares to the Treasurer of the
Company, the certificate or certificates for such shares free of any legend or
further restrictions together with, if applicable, a new certificate
representing any remaining Restricted Shares. It shall be a condition to the
obligation of the Company to issue or transfer shares of Common Stock upon the
lapse of restrictions that the Grantee (or any person entitled to act under this
paragraph 4(c)) pay to the Company, upon its demand, such amount as may be
requested by the Company for the purpose of satisfying its liability to withhold
federal, state or local income or other taxes by reason of such issuance or
transfer. If the amount requested is not paid, the Company may refuse to issue
or transfer shares of Common Stock.
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5. Restrictions. During the Restriction Period, neither the Restricted Shares
nor any right or privilege pertaining thereto may be sold, transferred,
assigned, pledged, hypothecated or otherwise disposed of or encumbered in any
way, by operation of law or otherwise, and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of or encumber the Restricted Shares or any
right or privilege pertaining thereto, otherwise than by will or by the laws of
descent and distribution, or upon the levy of any execution, attachment or
similar process thereupon, the Restricted Shares and all rights and privileges
given hereby shall immediately terminate and the Restricted Shares shall be
forfeited to the Company pursuant to paragraph 6 hereof.
6. Forfeiture.
(a) All the Grantee's rights to, and interest in, the Restricted Shares
shall terminate and be forfeited to the Company without payment of consideration
if either (i) the Grantee's employment by the Company or any subsidiary thereof
terminates (or, if the Grantee is no longer employed by the Company but has
become a consultant to the Company under a post-employment consulting
arrangement, such consulting arrangement terminates) for any reason other than
the termination of the Grantee by the Company other than for Serious Cause;
provided, however, that the Grantee's employment will not be deemed to have
terminated for this purpose while the Grantee is on a leave of absence which has
been approved by the Company or while the Grantee is serving as a consultant to
the Company or any subsidiary thereof under a post-employment consulting
arrangement, or (ii) any action prohibited by paragraph 5 hereof is taken. For
purposes of this Agreement, a transfer of employment from the Company to a
subsidiary or from a subsidiary to the Company or between subsidiaries shall not
be deemed a termination of employment.
(b) If Restricted Shares are forfeited for any of the reasons stated in
paragraph 6(a) hereof, such forfeiture shall be effective upon the occurrence of
the event giving rise to the forfeiture. The Grantee agrees to repay to the
Company all dividends, if any, paid after such event with respect to the
Restricted Shares which have been forfeited.
(c) If at any time the Grantee forfeits any Restricted Shares pursuant
to this Agreement, the Grantee agrees to return the certificate or certificates
for such Restricted Shares to the Company duly endorsed in blank or accompanied
by a stock power duly executed in blank.
(d) Determination as to whether an event has occurred resulting in the
forfeiture of, or lapse of restrictions on, Restricted Shares, in accordance
with this Agreement, shall be made by the Compensation Committee of the Board
(the "Committee"), and all determinations of the Committee shall be final and
conclusive.
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7. Company Right to Terminate Employment and Other Remedies. Nothing provided
herein shall be construed to affect in any way the right or power of the
Company, subject to the provisions of any other written agreement between the
Grantee and the Company relating to the subject matter, to terminate the
Grantee's employment as an employee of or a consultant to the Company at any
time for any reason with or without cause, nor to preclude the Company from
taking any action or enforcing any remedy available to it with respect to any
action or conduct on the Grantee's part.
8. Additional Documents.
(a) It is the intention of the Company that this award of Restricted
Shares shall meet the requirements of, and result in the application of, the
rules prescribed by Section 83 of the Internal Revenue Code of 1986, as in
effect at the date hereof, and applicable regulations thereunder. Accordingly,
each and every provision shall be construed and interpreted in such manner as to
conform with such intention and the Company reserves the right to execute and to
require the Grantee to execute any further agreements or other instruments,
which may be effective as of the date of the award of the Restricted Shares
covered by this Agreement, including, but without limitation, any instrument
modifying or correcting any provision hereof, or any action taken hereunder or
contemporaneously herewith, and to take any other action, which may be effective
as of the date of the award of the Restricted Shares covered by this Agreement,
that, in the opinion of counsel for the Company, may be necessary or desirable
to carry out such intention.
(b) If the Grantee fails, refuses or neglects to execute and deliver
any instrument or document or to take any action requested by the Company to be
executed or taken by the Grantee pursuant to the provisions of paragraph 8(a)
above for a period of 30 days after the date of such request, the Company may
require the Grantee, within ten 10 days after delivery to the Grantee of a
written demand by the Company, to forfeit all Restricted Shares then held by the
Grantee.
9. Severability. In the event that one or more of the provisions of this
Agreement is invalidated for any reason by a court of competent jurisdiction,
any provision so invalidated will be deemed to be separable from the other
provisions hereof, and the remaining provisions hereof will continue to be valid
and fully enforceable.
10. Interpretation. The Committee, as constituted from time to time, will,
except as expressly provided otherwise herein, have the right to determine any
questions or settle any ambiguities which arise in connection with this
Agreement and the Restricted Shares.
11. Successors and Assigns. Without limiting Section 4 hereof, the provisions of
this Agreement will inure to the benefit of, and be binding upon, the
successors, administrators, heirs, legal representatives and assigns of the
Grantee, and the successors and assigns of the Company.
12. Governing Law. The interpretation, performance and enforcement of this
Agreement will be governed by the laws of the State of New York, without giving
effect to the principles of conflict of laws thereof. Each party to this
Agreement hereby consents and
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submits himself, herself or itself to the jurisdiction of the courts of the
State of New York for the purposes of any legal action or proceeding arising out
of this Agreement.
13. Notices. Any notice to the Company provided for herein will be in writing to
the Company and any notice to the Grantee will be addressed to the Grantee at
his or her address on file with the Company. Except as otherwise provided
herein, any written notice will be deemed to be duly given if and when delivered
personally or sent by courier service, registered mail or electronic means of
communication, and addressed as aforesaid. Any party may change the address to
which notices are to be given hereunder by notice to the other party as herein
specified (provided that for this purpose any mailed notice will be deemed given
on the third business day following deposit of the same in the mail).
[Signature page follows]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officer and Grantee has also
executed this Agreement in duplicate, as of the day and year first above
written.
COGNITRONICS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
The undersigned Grantee hereby acknowledges receipt of an executed original of
this Restricted Stock Agreement and accepts the Restricted Shares granted
hereunder, subject to the terms and conditions set forth herein.
/s/ Xxxx Xxxxxxxxxxx
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Xxxx Xxxxxxxxxxx
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