RESTRICTED STOCK AGREEMENT
EXHIBIT
10.4
This restricted stock agreement (this “Agreement”) is entered into effective as of January 20,
2006 (the “Date of Grant”), between Hartville Group Inc., a Nevada corporation (the “Company”), and
Xxxxxxxxxxx Xxxxx (the “Executive”).
Background Information
A. The Company’s Board of Directors has approved and adopted the Restricted Stock Agreement
(“Agreement”) pursuant to which the Board may grant equity-based awards (“Awards”) in the form of
shares of the Company’s common stock, $.001 par value (“Shares”), to officers and other key
employees of the Company.
B. On the Date of Grant, the Board made an Award of 2,000,000 Shares to the Executive pursuant
to this Agreement.
Statement of Agreement
The parties hereby acknowledge the accuracy of the foregoing Background Information and hereby
agree as follows:
§1. Award of Shares. The Company hereby awards 2,000,000 Shares (the “Issued Shares”)
to the Executive subject to the terms and conditions of this Agreement.
The purchase price for the Issued Shares shall be an amount equal to the total amount of the
par value for such Shares, which purchase price shall be due and payable upon the execution of this
Agreement by the Executive
Following the execution of this Agreement by both parties and the payment of the purchase
price for the Issued Shares, the Company shall cause a share certificate evidencing the Issued
Shares to be issued in the Executive’s name (the “Share Certificate”).
§2. Vesting. All of the Issued Shares shall be subject to forfeiture by the Executive
until vested in accordance with this §2. The Issued Shares shall vest as follows:
| Amount of Issued Shares | Vesting Date | |
500,000
|
March 31, 2006 | |
500,000
|
June 30, 2006 | |
500,000
|
September 30, 2006 | |
500,000
|
December 31, 2006 |
Notwithstanding the vesting schedule above, Issued Shares may also vest pursuant to the
Employment Agreement between the Company and the Executive, dated January 20, 2006 (the “Employment
Agreement”) and shall also vest upon a “Change in Control” of the Company. “Change of Control”
means (i) any “person” (as defined in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934 (“Act”) (other than a current 10% beneficial owner (as defined in Rule 13d-3 under the Act) of the Company’s
securities) becomes the beneficial owner, directly or indirectly, of more than fifty percent (50%)
of the combined voting power of the then issued and outstanding securities of the Company or (ii)
the sale, transfer or other
disposition of all or substantially all of the assets of the Company,
whether by sale of assets, merger or otherwise.
§3. Rights as a Stockholder. Subject to the terms of this Agreement, the Executive
shall be entitled to all of the rights of a holder of Shares with respect to the Issued Shares,
including the right to vote the Issued Shares and to receive dividends declared with respect to the
Issued Shares. Nothing in this Agreement shall be construed, however, to confer to the Executive
the right to continued employment with the Company for any period, and the Executive acknowledges
that his employment is pursuant to the Employment Agreement and may be terminated by the Company as
provided therein.
§4. Tax Consequences. The Executive understands that he, and not the Company, shall
be responsible for his own federal, state, local, or foreign tax liability and any of the other tax
consequences that may arise as a result of the transactions contemplated by this agreement,
including without limitation filing an election under Section 83(b) of the Internal Revenue Code of
1986, as amended (the “Section 83(b) Election”), if he deems it appropriate. The Executive shall
rely solely on the determinations of his tax advisers or his own determinations, and not on any
statements or representations by the Company or any of its agents, with regard to all such tax
matters. The Executive shall notify the Company in writing if the Executive files the Section
83(b) Election with the Internal Revenue Service within 30 days from the Date of Grant. The
Company intends, in the event it does not receive from the Executive evidence of the Section 83(b)
Election filing by the Executive, to claim a tax deduction for any amount that would be taxable to
the Executive in the absence of such a Section 83(b) Election. If the Company is required to
withhold or to pay any taxes with respect to the issuance or vesting of the Issued Shares, the
Executive shall pay to the Company the amount of the required withholding or payment promptly
following the Company’s request.
§5. Investment Representations. The Executive hereby:
(a) Acknowledges that he has been advised that the Issued Shares have not yet been
registered under the Securities Act of 1933, as amended (the “1933 Act”), in reliance upon
certain exemptions contained in the 1933 Act and the rules and regulations promulgated
thereunder;
(b) Understands and agrees that, because the Company is relying upon the exemptions
contained in the 1933 Act and the rules and regulations promulgated thereunder, the Issued
Shares must be held indefinitely unless they are subsequently registered under the 1933 Act
or an exemption from registration is determined by counsel for or satisfactory to the
Company to be available; in the event that an exemption is not available or applicable, the
Company shall (use its best efforts to) register the Issued Shares pursuant to Form S-8 or
such other applicable registration statement.
(c) Represents to the Company that he is acquiring the Issued Shares for his own
account for investment purposes and not with a view to distribution or resale in connection
with any distribution of securities within the meaning of the
1933 Act, and that no transfer of any of the Issued Shares will be made that will
jeopardize the exemptions from federal registration referred to in subsection (a) above.
(d) Represents to the Company that he is currently a resident of the New York;
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(e) Acknowledges that he understands that, in addition to the restrictions on transfer
imposed by the federal securities laws, his rights to transfer of the Issued Shares are
further restricted by applicable state securities laws and, notwithstanding any compliance
with federal requirements, no transfer will be permitted unless it is done in compliance
with applicable state laws;
(f) Agrees that any certificate or certificates delivered to him evidencing the Issued
Shares or any substitute therefor will contain a legend stating that the Issued Shares have
not been registered under the 1933 Act and possibly setting forth the limitations on resale
contained in or contemplated by this agreement; and
(g) Agrees and understands that stop-transfer instructions prohibiting transfer of any
of the Issued Shares in violation of the restrictions referred to in this Agreement will be
filed with the Company and its transfer agent.
§6. Legends. All certificates evidencing the Issued Shares shall be endorsed with the
following legends (in addition to any legend required by applicable law):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (“THE 1933 ACT”), OR APPLICABLE STATE
SECURITIES LAWS, AND CANNOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS
UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND
ITS COUNSEL THAT THE SALE OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT
AND ALL APPLICABLE STATE SECURITIES LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE
WITH THE TERMS OF THE RESTRICTED STOCK AGREEMENT DATED [date] BETWEEN THE COMPANY
AND THE HOLDER OF THE SHARES, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
§7. Captions. The captions of the various sections of this Agreement are not part of
the context of this Agreement, but are merely labels to assist in locating those sections and shall
be ignored in construing this Agreement.
§8. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which taken together shall constitute one and the
same document.
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HARTVILLE GROUP, INC.
By
|
/s/ Xxxxxx X. Xxxxxxxxx | /s/ Xxxxxxxxxxx Xxxxx | ||||
| Chief Executive Officer | ||||||
Date:
|
February 9, 2006 | Date: February 9, 2006 |
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