etrials WORLDWIDE, INC. RESTRICTED STOCK AGREEMENT Pursuant to etrials WORLDWIDE, INC.
111108
etrials
WORLDWIDE, INC.
Pursuant
to
etrials
WORLDWIDE, INC.
2005
PERFORMANCE EQUITY PLAN
THIS RESTRICTED STOCK AGREEMENT, made
and entered into as of the 12th day of November, 2008, by and between etrials
Worldwide, Inc., a Delaware corporation (the “Corporation”),
and Xxxxxxx Xxxxx Xxxxxxxxx ( “Participant”).
WHEREAS, on November 10, 2008 (the
"Original
Grant Date"), the Board of Directors of the Corporation (the "Board")
approved the sale to Participant of One Hundred Thousand (100,000) shares of the
Corporation’s common stock, $0.0001 par value per share (the “Common
Stock”) with the number of shares fixed on November 11, 2008, subject to
execution and delivery of this Agreement; and
WHEREAS, such sale was approved by the
Compensation Committee of the Board of Directors of the Corporation (the "Compensation
Committee"), which is composed solely of “Independent” Directors, as
defined in NASDAQ Rules, and the Non-Employee Directors as defined in Rule 16b-3
of the Securities and Exchange Commission; and
WHEREAS, such sale is pursuant to the
2005 Performance Equity Plan of the Corporation (the “Plan”)
(capitalized terms used herein shall have the meanings set out in the Plan
unless otherwise specified in this Agreement); and
WHEREAS, this Agreement evidences such
sale and is subject to the terms of the Plan.
NOW, THEREFORE, in consideration of the
foregoing, of the mutual promises set forth below and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows:
1. Sale of
Shares. The Corporation hereby agrees to sell to Participant,
and Participant hereby agrees to purchase, a total of One Hundred Thousand
(100,000) shares of Common Stock, at the purchase price of $0.0001 per share (the “Purchase
Price”), in accordance with the terms and conditions stated in this
Agreement. The shares of Common Stock sold pursuant to this Agreement
are referred to below as “Shares” or
"Restricted Shares" and are subject to the terms and conditions of this
Agreement. Until Shares become vested as provided in Section 3 below,
the Shares are deemed to be “Restricted Shares.” Such purchase by
Participant and sale by the Corporation shall occur within ten (10) days after
the date of this Agreement.
2. Forfeiture. Upon
the occurrence of a Termination of Employment (as defined in Section 3 hereof),
the Corporation shall have an immediate and automatic option (the “Repurchase
Option”), without any action having to be taken on the part of
Participant or the Corporation to activate the Repurchase Option, to purchase
from Participant at a price per share equal to the Purchase Price (the “Option
Price”) any Shares that remain unvested pursuant to Section 3 hereof on
the date of Termination of Employment. For purposes of this
Agreement, all references to “Participant” shall be deemed to include
Participant’s estate and successors wherever applicable.
3. Vesting. The
Shares shall vest in sixteen (16) equal increments of 6,250 shares on the 12th
day of February, May, August and November, commencing on February 12, 2009 and
thereafter until November 12, 2012, with respect to an increment as specified
only if a Termination of Employment has not occurred on or prior to the
specified date for such increment.
For purposes of this Agreement, “Termination of
Employment” shall mean termination of any consulting or employment
relationship of Participant with the Corporation for any reason whatsoever other
than Normal Retirement, including, without limitation, death, disability,
voluntary termination, involuntary termination, dismissal with or without cause
or resignation.
The
provisions of Section 10 of the 2005 Performance Equity Plan shall apply to this
Agreement. Notwithstanding the foregoing, in the event Participant
has an employment agreement entered into prior to the date of this Agreement
that provides for earning a bonus that is payable after termination of
employment, then the terms of such employment agreement shall supersede the
provisions of this Agreement with respect to Termination of Employment to the
extent such provisions are inconsistent.
(a) Notwithstanding
anything to the contrary contained herein, if, in the event of a Termination of
Employment pursuant to Sections 4(a) (other than a Termination of Employment
without cause upon any Change of Control, which shall be solely governed by
Section 3(b) below), 4(d) or 4(e) of the Employment Agreement, dated November
12, 2008 between Participant and the Corporation (the "Employment
Agreement"), or due to Normal Retirement, then all of Participant's
Restricted Shares that remain unvested at the time of such termination shall
automatically accelerate and become vested upon the effective date of the
Termination of Employment.
(b) In
the event of Participant's Termination of Employment by the Corporation without
cause (as cause is determined pursuant to Section 4 of the Employment Agreement)
at any time upon or within six (6) months following the date of a Change of
Control of the Corporation, then 50% of Participant's Restricted Shares that
remain unvested at the time of such termination shall automatically accelerate
and become vested upon the effective date of the Termination of
Employment.
A “Change in
Control” shall be deemed to have occurred if, (i) the direct or
indirect beneficial ownership (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Act"), and
Regulation 13D thereunder) of fifty percent (50%) or more of the class of
securities then subject to this Agreement is acquired or becomes held by any
person or group of persons (within the meaning of Section 13(d)(3) of the
Act), but excluding the Corporation and any employee benefit plan sponsored or
maintained by the Corporation; (ii) a capital reorganization, merger or
consolidation involving the Corporation, unless (A) the transaction
involves only the Corporation and one or more of the Corporation’s parent
corporation and wholly-owned (excluding interests held by employees, officers
and directors) subsidiaries; or (B) the shareholders who had the power to
elect a majority of the board of directors of the Corporation immediately prior
to the transaction have the power to elect a majority of the board of directors
of the surviving entity immediately following the transaction; or (iii) the
sale of all or substantially all of the assets of the Corporation to another
corporation, person or business entity.
2
4. Transfer
of Stock, Investment Intent. Except as otherwise provided in
this Agreement, Participant shall not sell, transfer, assign, convey, pledge,
encumber or in any manner dispose of the Restricted Shares, either voluntarily
or involuntarily. All stock certificates evidencing the Restricted
Shares shall be restricted by a legend on each certificate in substantially the
following form:
The
shares of stock represented by the within certificate are subject to a
repurchase right by the Issuer. The transferring or encumbrance of the shares of
stock represented by the within certificate is restricted. The terms
of a Restricted Stock Agreement dated November 12, 2008, a copy of which is on
file at the principal office of the Issuer, govern the repurchase rights and
transfer restrictions.
The
shares represented by this certificate have not been registered under the
Securities Act of 1933. These shares have been acquired for
investment and not with a view to distribution or resale, and may not be
mortgaged, pledge, hypothecated, or otherwise transferred without an effective
registration statement for such shares under the Securities Act of 1933 or an
opinion of counsel for the corporation that registration is not required under
such act.
Participant understands that transfer
of the Restricted Shares will not be made otherwise than in accordance with both
of the legends set forth above and Shares, after they cease to be Restricted
Shares, will not be transferred otherwise than in accordance with the second
legend and that such lack of transferability means that the economic risk of the
investment may be substantial.
Participant represents and warrants
that Participant has received a copy of the Plan and Participant understands the
Plan. If the terms of this Agreement and the terms of the Plan
conflict with one another, Participant hereby agrees that the terms of the Plan
shall supersede the terms of this Agreement.
5. Exercise
of Corporation’s Repurchase Option. The Corporation may
exercise its Repurchase Option (as defined in Section 2 hereof) for unvested
Restricted Shares pursuant to this Agreement by giving Participant notice of its
election at any time within one hundred eighty (180) days after the latest date
on which a Termination of Employment occurs. The notice shall include
a closing date, which date shall be within thirty (30) days of the date the
notice is given. The Closing shall be at the principal office of the
Corporation. Voting rights on the unvested Restricted Shares to be
repurchased shall be vested in the Corporation as of the date the Corporation
gives notice of its election to exercise the option.
3
At its election, the Corporation may
pay the full amount for the Restricted Shares in cash or by check at the
Closing. Alternatively, if the Corporation at the time of purchase is
prohibited from repurchasing its shares under law or any contract, the
Corporation may pay the amount due by executing a promissory note for the
portion of the Option Price the Corporation is prohibited from
paying. The promissory note shall provide for payment of the balance
when the restriction on repurchase of its shares terminates. The
unpaid principal balance of such note shall bear interest at the prime rate of
Bank of America in Charlotte, North Carolina, on the date of closing; provided,
however, that the interest rate shall not be lower than the rate established by
the Internal Revenue Service for the avoidance of imputed interest on such note
at such time. Accrued interest shall be paid on the date(s) payments
of principal are due. The Corporation shall have the right to prepay
any portion or all of the balance due under such note at any time without
penalty. The Corporation's obligations under such promissory note
shall be secured by a pledge of Shares which are repurchased.
At the Closing, Participant’s legal
representative (as the case may be) shall deliver to the Corporation the stock
certificate(s) evidencing the Restricted Shares to be redeemed, properly
endorsed in blank with all transfer and excise taxes paid (and, where
appropriate, with stamps affixed thereto); and in the event of death,
Participant’s legal representative shall also deliver copies of his or her
letters testamentary or authority to act on behalf of the estate and a release
or tax release or tax letter from the appropriate tax authorities stating that
the Restricted Shares transferred are not subject to
taxes. Participant or Participant’s representative if Participant is
deceased, shall warrant that the Restricted Shares transferred are free and
clear of all liens, encumbrances and claims.
6. Transfer
or Encumbrance of Shares. The unvested Restricted Shares may
not be pledged, hypothecated or otherwise encumbered or transferred during the
Escrow Period (as defined below) without the prior express written consent of
the Corporation, which may be withheld for any reason or without
reason.
7. Payment
of Taxes, Section 83(b) Election, Section 409A and Securities Trading
Policy.
(a) The
number of Shares subject to this Agreement was determined by the closing sale
price of a share of Common Stock of the Corporation on November 11, 2008 on the
NASDAQ Global Market. Such closing sale price was $1.10 per share,
which the Corporation determined was the market value of each of the Shares as
of that date under the terms of the Plan. Participant acknowledges
that Participant understands that Participant may either (i) concurrently with
the execution of this Agreement, execute an election under Section 83(b) of the
Internal Revenue Code to be taxed currently on Participant’s compensation
related to receipt of the Restricted Shares within the 30-day period permitted
by Section 83(b), or (ii) if Participant fails to make such 83(b) election
Participant will incur tax liability when the Restricted Shares vest pursuant to
Section 3 hereof. Participant will rely on Participant's own tax
advisors in deciding whether to make a Section 83(b) election. The
Corporation shall have no responsibility to reminding Participant about the due
date for making a Section 83(b) election, the procedure for making such election
or for advising Participant of the tax effects of making or not making a Section
83(b) election.
4
(b) The
Corporation shall determine the amount of federal and state withholding due with
respect to Participant’s compensation from the Restricted Shares, and
Participant agrees to pay the Corporation the amount of withholding due with
respect to the Restricted Shares within five (5) days of the date the
Corporation gives Participant notice of the amount due, time being of the
essence. No stock certificates shall be delivered on behalf of
Participant until the payment of the withholding due is satisfied. If
payment of the withholding is not made within the time required, the Corporation
shall have the option of declaring this Agreement and the offer to issue the
Restricted Shares to Participant’s void, or the Corporation may arrange for
withholding of all amounts due from Participant’s paycheck (including, without
limitation, any amounts earned under a bonus earned by Participant) until
Participant’s obligation is satisfied.
(c) Notwithstanding
anything in this Agreement to the contrary, the parties shall use commercially
reasonable efforts to make all terms of this Agreement consistent with the
provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), including attempting to take action at such times as shall not result
in additional taxation to Participant pursuant to the provisions of such Section
409A of the Code. However, the Corporation shall have no liability to
Participant for any Section 409A liability of Participant.
(d) The
resale of the Shares by Participant is subject to restrictions under securities
laws, rules and regulations and the Corporation's xxxxxxx xxxxxxx
policies. Participant understands that it is likely that Participant
will not be able to sell any vested Shares before taxes become due by
Participant. In the event Participant is unable to sell the Shares,
or in the event the resale price of the Shares is lower than the tax liability
of Participant, then Participant shall have the obligation to pay taxes from
other financial sources of Participant and the Corporation shall have no
liability to Participant.
8. Escrow. As security for
the faithful performance of the terms of this Agreement and to ensure the
availability for delivery of Participant’s shares upon exercise of the
Repurchase Option, Participant agrees to deliver to and deposit with the Chief
Financial Officer of the Corporation (the “Escrow
Agent”), the certificate(s) representing the Restricted Shares, together
with an assignment separate from certificate duly endorsed (with date and number
of shares blank) in the form acceptable to the Corporation. Said
documents are to be held by the Escrow Agent. The Escrow Agent shall
deliver the Shares to Participant acting on instructions of a majority of the
Board of Directors or of a Committee of the Board that is authorized to
administer the Plan. The Escrow Agent shall deliver any Shares which
have vested to Participant promptly upon (and in no event more than five (5)
days after) request by Participant. “Escrow
Period” shall mean the period beginning the date the Restricted Shares
issued in the name of Participant and continuing to the date the restrictions on
the Restricted Shares are terminated pursuant to Section 3 hereof.
9. Rights in
Restricted Stock. Subject to the provisions of this Agreement,
Participant shall exercise all rights and privileges of a holder of Common Stock
with respect to the Restricted Shares.
5
10. Termination
of Certain Rights and Obligations. The Board of Directors
of the Corporation shall have the right, but not the obligation, to terminate
all or any selected provisions of this Agreement for the purpose of complying
with applicable laws, rule or regulations.
11. Specific
Performance. Because of the unique character of the Restricted
Shares, the parties to this Agreement agree that the parties will be irreparably
damaged in the event that this Agreement is not specifically
enforced. Should any dispute arise concerning the sale or transfer of
the Restricted Shares, an injunction may be issued restraining any sale or
transfer pending the determination of such controversy. In the event
of any controversy concerning the right of the Corporation to purchase, or of
Participant to sell, or of the Escrow Agent to deliver, any of the Shares, such
right or obligation shall be enforceable in a court of equity by a decree of
specific performance. Such remedy shall, however, be in addition to
any other remedies which the parties may have
Each party agrees that in the event of
any violation of this Agreement, an action may be commenced for any such
preliminary and permanent injunctive relief and other equitable relief in any
court of competent jurisdiction in the State of North Carolina or in any other
court of competent jurisdiction. Each party hereby waives any
objections on the grounds of improper jurisdiction or venue to the commencement
of any action in the State of North Carolina and agrees that effective service
of process may be made upon such party by mail under the notice provisions
contained in Section 16 hereof.
12. No
Contract of Employment. Nothing contained in this Agreement
shall be deemed to require the Corporation to continue Participant’s employment
with the Corporation. Participant shall, except as otherwise provided
in Participant’s employment agreement with the Corporation, if any, at all times
be an employee-at-will of the Corporation and the Corporation may discharge
Participant at any time for any reason, with or without cause, and with or
without severance compensation. From time to time, the Corporation
may distribute employee manuals or handbooks, and officers or other
representatives of the Corporation may make written or oral statements relating
to the Corporation’s policies and procedures. Such manuals, handbooks
and statements are intended only for the general compliance of
employees. No policies, procedures or statements of any nature by or
on behalf of the Corporation (whether written or oral, and whether or not
contained in any formal employee manual or handbook) shall be construed to
modify this Agreement.
13. Stock
Splits, etc. In the event that, as a result of a stock split
or stock dividend or combination of shares or any other change, or exchange for
other securities, by reclassification, reorganization, merger, consolidation,
recapitalization or otherwise, Participant shall, as the owner of Restricted
Shares subject to restrictions hereunder, be entitled to new or additional or
different shares of stock certificates, the certificate or certificates for, or
other evidences of, such new or additional or different shares or securities,
shall also be imprinted with a legend as provided in Section 4 hereof, and be
deposited with the Escrow Agent in accordance with Section 8 hereof and all
provisions of this Agreement relating to restrictions and lapse of restrictions
shall be applicable to such new or additional or different shares or securities
to the extent applicable to the shares with respect to which they were
distributed, and such new or additional or different shares or securities shall
be deemed to be “Restricted Shares” for all purposes hereof; provided, however,
that if Participant shall receive rights, warrants or fractional interests in
respect of any of such Restricted Shares, such rights or warrants may be held,
exercised, sold or otherwise disposed of, and such fractional interests may be
settled, by Participant free and clear of the restrictions set forth in this
Agreement. The Option Price per share set forth in Section 2 hereof
shall be equitably adjusted upon any change in the number of Restricted Shares
pursuant to this Section so that the aggregate repurchase price for all
Restricted Shares shall not change.
6
14. Burden
and Benefit; Corporation. This Agreement shall be binding
upon, and shall inure to the benefit of, the Corporation and Participant,
and their respective heirs, personal and legal representatives, successors and
assigns. As used in this Section as well as in Sections 2 and 3
hereof, the term the “Corporation”
shall also include any corporation which is the parent or a subsidiary of the
Corporation or any corporation or entity which is an affiliate of the
Corporation by virtue of common (although not identical) ownership, and for
which Participant is providing services in any form during Participant’s
employment with the Corporation or any such other corporation or
entity. Participant hereby consents to the enforcement of any and all
of the provisions of this Agreement by or for the benefit of the Corporation and
any such other corporation or entity.
15. Entire
Agreement; Authority of Committee. This Agreement, together
with the Employment Agreement, contains the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements or
understandings, oral or written, with respect to the subject matter
herein. Participant accepts the Shares in full satisfaction of any
and all obligations of the Corporation to sell Shares to Participant as of the
date hereof. All determinations made by the Committee with respect to
the interpretation, construction and application of any provision of this
Agreement shall be final, conclusive and binding on the parties.
16. Notices. Any
and all notices under this Agreement shall be in writing, and sent by hand
delivery or by certified or registered mail (return receipt requested and
first-class postage prepaid), in the case of the Corporation, to its principal
executive offices to the attention of the President, and, in the case of
Participant, to Participant’s address as shown on the Corporation’s
records.
17. Governing
Law. This
Agreement shall be construed and enforced in accordance with the laws of the
State of Delaware, without reference to its conflicts of laws rules or the
principles of the choice of law.
18. Modifications. No
change or modification of this Agreement shall be valid unless the same is in
writing and signed by the parties hereto.
19. Terms and
Conditions of Plan. The terms and conditions included in the
Plan, the receipt of a copy of which Participant hereby acknowledges by
execution of this Agreement, are incorporated by reference herein, and to
the extent that any conflict may exist between any term or provision of this
Agreement and any term or provision of the Plan, such term or provision of the
Plan shall control. Such Plan includes provisions for the forfeiture
of economic benefits of grants under such Plan following termination of
employment; provided, however, that the repurchase right of the Corporation in
Section 5 hereof supersedes the final sentence of Section 7.2(c) of the Plan
with respect to the forfeiture of Restricted Stock
only. Notwithstanding the foregoing, Employee acknowledges that he is
subject to any damages or remedy provisions found herein, in the Employment
Agreement or in the Plan (including, but not limited to, the damages and remedy
provisions of Section 13.3(a) of the Plan), which section 6 and 7 of the
Employment Agreement supersede clauses (i), (ii) and (iii) of such Section
13.3(a) for all purposes of determining the applicability of such damages and
remedy provisions.
7
20. Forfeiture
of Economic Benefits. If within two years
after the date of any financial statements or other public disclosure by
the Corporation, the Compensation Committee determines that the financial
statements or other public disclosures were inaccurate or were
misleading in any material respect and the Compensation Committee
determines in good faith at any time during the course of investigation
following discovery of the inaccuracy or omission that Participant played any
material role in causing such inaccuracy or misleading omission, or that
Participant was aware of such inaccuracy or omission, then Participant shall be
obligated to repay to the Corporation any economic benefits obtained by
Participant under this Agreement, including the value of securities
issued under this agreement or pursuant to the Option, that the
Compensation Committee determines in good faith was the direct or indirect
result of such material inaccuracy or omission and further provided that
either before or after such date the Corporation shall have any other remedies
available under applicable law and shall not be limited to the remedies provided
in this Section. The determination of the Compensation Committee, if made in
good faith, shall be final and binding on Participant.
21. Covenants
and Representations and Covenants of Participant. Participant
represents, warrants, covenants and agrees with the Corporation as
follows:
(a) The
Shares are being received for Participant’s own account without the
participation of any other person, with the intent of holding the Shares
issuable pursuant thereto for investment and without the intent of
participating, directly or indirectly, in a distribution of the Shares and not
with a view to, or for resale in connection with, any distribution of the Shares
or any portion thereof.
(b) Participant
is not acquiring the Shares based upon any representation, oral or written, by
any person with respect to the future value of, or income from, the Shares, but
rather upon an independent examination and judgment as to the prospects of the
Corporation.
(c) Participant
has had the opportunity to ask questions of and receive answers from the
Corporation and its executive officers and to obtain all information necessary
for Participant to make an informed decision with respect to the investment in
the Corporation represented by the Shares.
(d) Participant
is able to bear the economic risk of any investment in the Shares, including the
risk of a complete loss of the investment, and Participant acknowledges that
Participant must continue to bear the economic risk of any investment in Shares
for an indefinite period.
8
(e) Participant
understands and agrees that the Shares may be issued and sold to Participant
without registration under any state or federal laws relating to the
registration of securities and in that event will be issued and sold in reliance
on exemptions from registration under appropriate state and federal
laws.
(f) Shares
issued to Participant will not be offered for sale, sold or transferred by
Participant other than pursuant to: (i) an effective registration
under applicable state securities laws or in a transaction which is otherwise in
compliance with those laws; (ii) an effective registration under the Securities
Act of 1933, or a transaction otherwise in compliance with such Act; and (iii)
evidence satisfactory to the Corporation of compliance with all applicable state
and federal securities laws. The Corporation shall be entitled to
rely upon an opinion of counsel satisfactory to it with respect to compliance
with the foregoing laws.
(g) The
Corporation will be under no obligation to register the Shares or to comply with
any exemption available for sale of the Shares by Participant without
registration, and the Corporation is under no obligation to act in any manner so
as to make Rule 144 promulgated under the Securities Act of 1933 available with
respect to any sale of the Shares by Participant.
(h) Participant
has not relied upon the Corporation with respect to any tax consequences related
to the grant or exercise of this Option, or the disposition of Shares purchased
pursuant to its exercise. Participant acknowledges that, as a result
of the grant or vesting of the Shares, Participant may incur a substantial tax
liability. Participant assumes full responsibility for all such
consequences and the filing of all tax returns and elections Participant may be
required or find desirable to file in connection therewith. In the
event any valuation of Shares purchased pursuant to its exercise must be made
under federal or state tax laws and such valuation affects any return or
election of the Corporation, Participant agrees that the Corporation may
determine such value and that Participant will observe any determination so made
by the Corporation in all returns and elections filed by
Participant. In the event the Corporation is required by applicable
law to collect any withholding, payroll or similar taxes by reason of the grant
or vesting of the Shares, Participant agrees that the Corporation may withhold
such taxes from any monetary amounts otherwise payable by the Corporation to
Participant and that, if such amounts are insufficient to cover the taxes
required to be collected by the Corporation, Participant will pay to the
Corporation such additional amounts as are required.
(i) The
agreements, representations, warranties and covenants made by Participant herein
shall apply to all of the Shares issued to Participant from time to
time. Acceptance by Participant of any certificate representing
Shares shall constitute a confirmation by Participant that all such agreements,
representations, warranties and covenants made herein shall be true and correct
at that time.
9
(j) In
the event any underwriter of securities of the Corporation requests Participant
to sign any agreement restricting resale of the Shares in connection with any
public offering by the Corporation, Participant agrees to sign such agreement,
provided the officers of the Corporation have signed an agreement no less
restrictive. The Corporation may instruct its transfer agent not to
transfer the Shares if requested by an underwriter as described
above.
(The
remainder of this page is intentionally left blank.)
10
IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be executed effective as of the day and year first
above written.
|
etrials
Worldwide, Inc.
By: /s/ Xxxxxx
Xxxxxxxxx
Print
Name: Xxxxxx Xxxxxxxxx, CFO
Participant:
/s/
Xxxxxxx Xxxxx Xxxxxxxxx
Xxxxxxx Xxxxx
Xxxxxxxxx
Address: 0000
Xxxxx Xx
Xxxx, XX.
00000
|
11
