RESTRICTED STOCK AGREEMENT
This RESTRICTED STOCK AGREEMENT (this "Agreement") is entered into as
of October ___, 2006, by and between Xxxxxxx Corporation, a Delaware
corporation (the "Company"), and Xxxxx X. Xxxxxxx, a resident of the State
of Tennessee ("Executive"). Certain definitions are set forth in Section 9
of this Agreement.
RECITALS:
Executive and the Company are parties to that certain Employment
Agreement, dated as of the date hereof (the "Employment Agreement"), pursuant
to which the Company has agreed to issue and award to Executive shares of its
common stock to be purchased by Executive at par value $.0001 per share
("Common Stock"), on the terms and subject to the conditions set forth in
this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree
as follows:
Section 1. Effective Time. This Agreement shall become effective upon
the date entered in paragraph one above.
Section 2. Restricted Stock Award. On October 23, 2006, the Company
shall issue to Executive 1,200,000 restricted shares of Common Stock (the
"Restricted Stock"), which shall be subject to the terms and conditions
hereof. The Company shall promptly thereafter deliver to Executive
certificate(s) representing the Restricted Stock. Subject to the terms
and conditions of this Agreement, Executive shall have all of the rights of
a stockholder of the Company with respect to the Restricted Stock, including,
without limitation the right to vote such stock on any matter to be voted
on by the stockholders of Company and the right to receive dividends with
respect to the stock, provided that such rights shall terminate upon
forfeiture of any such stock pursuant to Section 4 hereof, and provided
further that Executive may not transfer or assign any Restricted Stock
except to the extent such stock is vested hereunder.
Section 3. No Guarantee of Employment. Executive acknowledges and
agrees that neither the issuance of the Restricted Stock to Executive nor
any provision contained herein shall entitle Executive to remain in the
employment of the Company or any of its Subsidiaries or affect the right of
the Company or any of its Subsidiaries, subject to the terms of the Employment
Agreement or any successor agreement, to terminate Executive's employment at
any time for any reason.
Section 4. Vesting of Restricted Stock.
(a) For so long as Executive is employed by the Company, the Restricted
Stock shall vest and become unrestricted as follows:
(i) 300,000 shares of Restricted Stock shall vest upon issuance;
(ii) 25,000 shares of Restricted Stock shall vest on the 23rd day of
each month for sixty months, the expiration of the Employment
Agreement.
(b) Notwithstanding subparagraph (a) above:
(i) If Executive's employment by the Company and its Subsidiaries is
terminated by the Company without Cause or by Executive for Good
Reason, the portion of the Restricted Stock that has not become
vested as of the date of such event shall become fully vested
immediately prior to such termination of employment.
(ii) If Executive's employment by the Company and its Subsidiaries
is terminated due to the death or Disability of Executive, the
portion of the Restricted Stock that has not become vested as of
the date of such event shall become fully vested immediately prior
to such termination of employment.
(iii) If Executive has been continuously employed by the Company
or a Subsidiary from the date of this Agreement until the occurrence
of a Change of Control, the portion of the Restricted Stock that has
not become vested as of the date of the Change of Control shall
become fully vested immediately prior to the Change of Control.
(c) Except as set forth herein, any Restricted Stock that is not vested
shall be automatically forfeited by Executive upon his termination of
employment by the Company and its Subsidiaries, without any action by
Executive or the Company. In such event, Executive shall deliver to the
Company certificate(s) representing the forfeited shares, together with such
additional documentation as the Company may reasonably request.
Section 5. Tax Matters. The parties acknowledge: (a) that Executive
will be required to recognize income with respect to the Restricted Stock
if and when such stock becomes vested hereunder or, if Executive makes an
election under Section 83(b) of the Internal Revenue Code of 1986, as
amended, upon issuance of such stock; and (b) that the Company may have
tax withholding obligations resulting from Executive's recognition of income.
In addition to the other obligations of the Company hereunder, the Company,
upon recognition of income by Executive with respect to any Restricted
Stock, shall pay to Executive in cash an amount equal to Executive's total
state and federal income tax liability with respect to such income, plus
an amount equal to Executive's total state and federal income tax liability
with respect any cash payments hereunder, all determined based on the
highest state and federal marginal income tax rates then in effect
(collectively, the "Tax Payment"). The Company shall withhold the
amount of the Tax Payment to the extent necessary to meet its tax
withholding obligations (with respect to both the Restricted Stock and
the Tax Payment) and shall pay the remainder of the Tax Payment, if any,
to Executive in cash. In the event it is subsequently determined that
the amount of income reported by the Company with respect to the Restricted
Stock is understated, the amount of the Tax Payment shall thereupon be
increased (in accordance with the methodology set forth herein) to reflect
the increase in income recognized by Executive, and the Company shall
immediately pay the amount of such increase to Executive in cash.
Section 6. Stock Certificates. Executive hereby acknowledges that any
certificates evidencing the shares of Restricted Stock of the Company issued
pursuant to this Agreement shall bear the following restrictive legends:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT FOR THESE SHARES OR AN OPINION OF THE COMPANY'S
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE ALSO SUBJECT
TO TRANSFER RESTRICTIONS AND POTENTIAL FORFEITURE
PURSUANT TO THE PROVISIONS OF THE RESTRICTED STOCK AWARD
AGREEMENT, DATED OCTOBER___, 2006, BETWEEN THE COMPANY
AND XXXXX X. XXXXXXX, WHICH IS AVAILABLE FOR INSPECTION AT
THE PRINCIPAL OFFICES OF XXXXXXX CORPORATION.
Section 7. Share Adjustment. The Company hereby confirms that (i) in the
event the outstanding shares of Common Stock of the Company shall be changed
into an increased number of shares, through a stock dividend or a split-up of
shares, or into a decreased number of shares, through a combination of shares,
then immediately after the record date for such change, the number of shares
of Restricted Stock then subject to this Agreement shall be proportionately
increased, in case of such stock dividend or split-up of shares, or
proportionately decreased, in case of such combination of shares; and (ii)
in the event that, as result of a reorganization, sale, merger, consolidation
or similar occurrence, there shall be any other change in the shares of
Common Stock of the Company, or of any stock or other securities into which
such Common Stock shall have been changed, or for which it shall have been
exchanged, then equitable adjustments to the shares of Restricted Stock then
subject to this Agreement (including, but not limited to, changes in the
number or kind of shares then subject to this Agreement) shall be made.
Section 8. Registration of Shares. The Company agrees that within sixty
(60) calendar days after the Company becomes subject to the reporting
requirements of the Securities Exchange Act and eligible to register shares
on Form S-8, the Company shall cause the Restricted Stock to be registered
with the Securities and Exchange Commission on Form S-8 or any similar form
registration. The Company shall be responsible for any and all fees and
expenses related to such registration.
Section 9. Definitions.
"Cause" has the meaning ascribed to it in the Employment Agreement.
"Change of Control" means the occurrence of any of the following events
after the date hereof: (a) any Person, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act, becomes the beneficial owner
of the Company's securities having a majority of the combined voting power of
the Company; (b) as the result of, or in connection with any merger or other
business combination of the Company, the holders of the voting securities of
the Company immediately prior to such transaction constitute, following such
transaction, less than a majority of the combined voting power of the
then-outstanding securities of the surviving entity (or in the event each
entity to such business combination survives, the surviving entity that is the
parent entity) after such transaction; or (c) the Company sells or transfers
all of or substantially all of its assets, and the direct and indirect
holders of the Company's voting securities immediately prior to such
transaction hold less than a majority of the voting power of the then-
outstanding securities of the acquiring entity after such transaction.
"Disability" the meaning ascribed to it in the Employment Agreement.
"Good Reason" has the meaning ascribed to it in the Employment
Agreement.
"Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust,
a joint venture, an unincorporated organization, investment fund, any other
business entity and a governmental entity or any department, agency or
political subdivision thereof.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association, or business entity of
which (i) if a corporation, a majority of the total voting power of shares
of stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers, or trustees thereof is at the
time owned or controlled, directly or indirectly, by that Person or one or
more of the other Subsidiaries of that Person or a combination thereof,
or (ii) if a limited liability company, partnership, association, or other
business entity (other than a corporation), a majority of partnership or
other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that
Person or a combination thereof. For purposes hereof, a Person or Persons
shall be deemed to have a majority ownership interest in a limited liability
company, partnership, association, or other business entity (other than a
corporation) if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association, or other business
entity gains or losses or shall be or control any managing director or
general partner of such limited liability company, partnership, association,
or other business entity. For purposes hereof, references to a
"Subsidiary" of any Person shall be given effect only at such times that
such Person has one or more Subsidiaries, and, unless otherwise indicated,
the term "Subsidiary" refers to a Subsidiary of the Company.
Section 10. Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed
to have been duly given and received when (a) delivered by hand (with
confirmation of receipt), (b) sent by facsimile with confirmation of
transmission by the transmitting equipment, (c) received by the
addressee, if sent by certified mail, return receipt requested, or
(d) received by the addressee, if sent by a nationally recognized overnight
delivery service, return receipt requested, in each case to the appropriate
addresses or facsimile numbers set forth below each party's signature hereto
(or to such other addresses or facsimile numbers as a party may designate
by notice to the other parties).
Section 11. General Provisions.
(a) Severability. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held by a court of
competent jurisdiction to be invalid, illegal or unenforceable in any
respect in any jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement or the application
of that provision to any other person or circumstance, and this Agreement
shall then be construed in that jurisdiction as if such invalid, illegal
or unenforceable provision had not been contained in this Agreement, but
only to the extent of such invalidity, illegality or unenforceability.
(b) Complete Agreement. This Agreement constitutes the entire
understanding between Executive and the Company with respect to the subject
matter hereof, and supersedes all other agreements, whether written or oral,
related thereto.
(c) No Strict Construction. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express
their mutual intent, and no rule of strict construction shall be applied
against any party.
(d) Counterparts. This Agreement may be executed in counterparts,
each of which will be deemed to be an original copy of this Agreement and
all of which, when taken together, will be deemed to constitute one and
the same agreement.
(e) Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and permitted assigns of the parties hereto
whether or not so expressed.
(f) Governing Law; Forum; Service of Process. This Agreement
shall be governed by and construed in accordance with the laws of the State
of Tennessee. This Agreement and its subject matter have substantial
contacts with Tennessee, and all actions, suits, or other proceedings with
respect to this Agreement shall be brought only in a court of competent
jurisdiction sitting in Xxxxxx County,Tennessee, or in the Federal
District Court having jurisdiction over that county. In any such action,
suit, or proceeding, such court shall have personal jurisdiction of all
of the parties hereto, and service of process upon them under any applicable
statutes, laws, and rules shall be deemed valid and good.
(g) MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH
APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION
RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, EACH PARTY TO
THIS AGREEMENT HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE BETWEEN OR AMONG ANY
OF THE PARTIES HERETO, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE,
ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THIS AGREEMENT,
THE TRANSACTIONS CONTEMPLATED HEREBY AND/OR THE RELATIONSHIP ESTABLISHED
AMONG THE PARTIES HEREUNDER.
(h) Amendment. This Agreement may be amended, modified or
supplemented only by a writing executed by or on behalf of the Company and
Executive.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
Xxxxxxx Corporation
By:
Name:
Its:
Xxxxx X. Xxxxxxx
Notices Schedule
If to the Company:
Xxxxxxx Corporation
P. O. Xxx 0000
XxXxxxxxxxx, XX 00000-0000
Attn:
Facsimile:
If to Executive:
Xxxxx X. Xxxxxxx
000 Xxxx Xxxx
XxXxxxxxxxx, XX 00000
Facsimile:
with copies to:
Xxxxxxxx & Xxx, PLC
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
