RESTRICTED STOCK AGREEMENT
Exhibit
10.1
THIS
RESTRICTED STOCK AGREEMENT, made and entered into as of the ____ day
of
___________, 2007, by and between Smart Online, Inc., a Delaware corporation
(the “Company), and __________________________ (the “Employee”).
WHEREAS,
in consideration of the services of the Employee, the Company is desirous of
giving the Employee shares of common stock of the Company under the Company’s
2004 Equity Compensation Plan (the “Plan”) (all capitalized terms not otherwise
defined herein shall have the meaning set forth in the Plan), subject to the
restrictions set forth below.
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 agree as
follows:
1. Restricted
Stock Award.
The
Company shall issue _____________ (_______) shares of the common stock of the
Company (the “Securities”) to the Employee, as part of the Employee’s
compensation. The Securities are subject to the restrictions set forth in
Section 4 below.
2.
Employee
Representations.
The
Employee hereby acknowledges and represents the following:
(a) Compensation.
The
Employee acknowledges that the Securities are part of his or her compensation
from the Company.
(b) Taxes.
The
Employee has not relied upon the Company with respect to any tax consequences
related to the acquisition or disposition of the Securities. The Employee
acknowledges that the Employee may incur a substantial tax liability. The
Employee assumes full responsibility for all such consequences and the filing
of
all tax returns and elections the Employee may be required or find desirable
to
file in connection therewith. In the event any valuation of the Securities
purchased pursuant to its exercise must be made under federal or state tax
laws
and such valuation affects any return or election of the Company, the Employee
agrees that the Company may determine such value and that the Employee will
observe any determination so made by the Company in all returns and elections
filed by the Employee. In the event the Company is required by applicable law
to
collect any withholding, payroll or similar taxes by reason of the grant of
the
Securities, the Employee agrees that the Company may withhold such taxes from
any monetary amounts otherwise payable by the Company to the Employee and that,
if such amounts are insufficient to cover the taxes required to be collected
by
the Company, the Employee will pay to the Company such additional amounts as
are
required.
(c) Compliance
with Securities Laws.
The
Employee hereby agrees to comply with any plan, policy or other document of
the
Company approved by the Board of
Directors
of the Company to ensure compliance with securities laws, rules and regulations
both prior to the Termination of Service of the Employee and for one (1) year
thereafter. The Company may impose stop transfer restrictions with respect
to
the Securities to enforce this provision.
(d) Legends.
Each
certificate representing Securities shall also bear any legend required by
any
applicable state securities law or by any other agreement to which the holder
thereof is a party or by which the holder thereof is bound, including the
provisions of any existing “lock-up” or similar agreements between the Employee
and the Company, and including the following legend as required in Section
4,
below:
THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ASSIGNED, CONVEYED
OR
PLEDGED ONLY UPON COMPLIANCE WITH THE TERMS AND CONDITIONS OF A RESTRICTED
STOCK
AGREEMENT, AS THE SAME MAY BE AMENDED OR REPLACED FROM TIME TO TIME, A COPY
OF
WHICH IS ON FILE WITH, AND AVAILABLE FOR INSPECTION AT THE OFFICES OF THE
SECRETARY OF THE CORPORATION.
3. Condition
to Issuance.
The
representations, warranties, understandings, acknowledgments and agreements
in
this Agreement are true and accurate as of the date hereof, shall be true and
accurate as of the date of the issuance of the Securities by the Company and
shall survive thereafter.
4. Restrictions.
The
Securities described above shall be subject to the following
restrictions:
(a) Restriction
Period; Lapse of Restriction.
The
Employee agrees not to transfer, assign or sell the Securities, without the
express written consent of the Company, which may be granted or withheld in
the
sole discretion of the Company. This restriction shall expire and cease to
be of
any effect with respect to the number of shares equal to
_________________________________________________________________________________________________________________________________________;
provided
that
this
restriction shall lapse with respect to an increment as specified only if the
Employee is employed by the Company on the specified date for such increment.
Shares representing the Securities shall bear a legend to such
effect.
The
schedule set forth above is cumulative, so that the Securities as to which
the
restriction has lapsed on and after a date indicated by the schedule may be
transferred, assigned, or sold at any subsequent date.
(b) Acceleration
of Lapse of Restriction.
Upon a
Change of Control or Corporate Reorganization, as defined below, the restriction
set forth in Section 5(a) shall accelerate so as to lapse as to all of the
Securities to which the restriction applies on the date of such
event.
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(i) A
“Change
in Control” shall be deemed to have occurred if, after the class of stock then
subject to this Agreement becomes publicly traded, (1) the direct or indirect
beneficial ownership (within the meaning of Section 13(d) of 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 Company and any employee benefit plan sponsored or maintained
by the Company, or (2) assets or earning power constituting more than fifty
percent (50%) of the assets or earning power of the Company and its subsidiaries
(taken as a whole) is sold, mortgaged, leased or otherwise transferred, in
one
or more transactions not in the ordinary course of the Company’s business, to
any such person or group of persons; provided, however, that a Change in Control
shall not be deemed to have occurred upon an investment by one or more venture
capital funds, Small Business Investment Companies (as defined in the Small
Business Investment Act of 1958, as amended) or similar financial investors.
For
the purposes of this Agreement, the class of stock then subject to this
Agreement shall be deemed to be “publicly traded” if such stock is listed or
admitted to unlisted trading privileges on a national securities exchange or
as
to which sales or bid and offer quotations are reported in the automated system
operated by the National Association of Securities Dealers, Inc.
(ii) A
“Corporate Reorganization” means the happening of any one (1) of the following
events: (1) the dissolution or liquidation of the Company; (2) a capital
reorganization, merger or consolidation involving the Company, unless (A) the
transaction involves only the Company and one or more of the Company’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 Company 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; (3) the sale of all
or
substantially all of the assets of the Company to another corporation, person
or
business entity; or (4) an acquisition of Company stock, unless the shareholders
who had the power to elect a majority of the board of directors of the Company
immediately prior to the acquisition have the power to elect a majority of
the
board of directors of the Company immediately following the transaction;
provided, however, that a Corporate Reorganization shall not be deemed to have
occurred upon an investment by one or more venture capital funds, Small Business
Investment Companies (as defined in the Small Business Investment Act of 1958,
as amended) or similar financial investors.
5. Effect
of Termination of Service.
The
restriction on the Securities shall lapse as specified in Section 4 above until
the Termination of Service of the Employee for reasons other than death,
Disability or Retirement. Pursuant to Section 7.6 of the Plan, where the
Termination of Service is for death, Disability or Retirement, than the
Committee shall determine, in its sole discretion, whether to waive any
remaining restriction.
All
shares of the Securities still subject to the restriction set forth in Section
5
shall be forfeited by the Employee and reacquired by the Company on such date.
Upon such date, the Employee shall have no further rights to any Securities
to
which the restriction has not lapsed.
6. Rights
as Stockholder.
The
Employee shall have all rights as a stockholder with respect to the Securities;
provided,
however,
any
dividends or distributions on the Securities shall be
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automatically
deferred and reinvested as restricted Securities subject to the same
restrictions set forth in this Agreement.
7. Incorporation
of the 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.
8. Governing
Law.
This
Agreement shall be enforced, governed and construed in all respects in
accordance with the laws of the State of Delaware, as such laws are applied
by
Delaware courts to agreements entered into and to be performed in Delaware,
and
shall be binding upon the Employee, the Employee’s heirs, estate, legal
representatives, successors and assigns and shall inure to the benefit of the
Company and its successors and assigns.
9. Miscellaneous.
This
Agreement and the Plan constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and supersedes any and all prior
or
contemporaneous representations, warranties, agreements and understandings
in
connection therewith, other than any existing “lock-up” or similar agreements
between the parties which by their terms would apply to the Securities. This
Agreement may be amended only by a writing executed by all parties hereto.
This
Agreement may be executed in one or more counterparts.
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IN
WITNESS WHEREOF, Employee has executed this Restricted Stock Agreement effective
as of the date first written above.
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EMPLOYEE:
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SMART
ONLINE, INC.
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By:________________________
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By:_________________________
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Name:
______________________
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Title:
_______________________
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Print
Name:__________________
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Address:_____________________
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_____________________
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_____________________
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