RESTRICTED STOCK AGREEMENT
Exhibit
10.6
THIS
RESTRICTED STOCK AGREEMENT, made and entered into as of the _____ day of
__________, 20____, by and between Smart Online, Inc., a Delaware corporation
(the “Company”),
and
__________________, an individual (“Grantee”).
WHEREAS,
in consideration of the services of Grantee, the Company is desirous of giving
Grantee 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
Grantee, as part of Grantee’s compensation. The Securities are subject to the
restrictions set forth in Section 4 below.
2. Director
Representations.
Grantee
hereby acknowledges and represents the following:
(a) Compensation.
Grantee
acknowledges that the Securities is part of his or her compensation from the
Company.
(b) Investment.
Grantee
will
treat the Securities as if acquired for investment for Grantee’s
own
account and not with a view to, or for resale in connection with, any
distribution thereof, and Grantee
has no
present intention of selling or distributing the Securities. Grantee
does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to such person or to any third person
with
respect to any of the Securities other than as set forth in this
Agreement.
(c) Taxes.
Grantee
has not
relied upon the Company with respect to any tax consequences related to the
acquisition or disposition of the Securities. Grantee
acknowledges that Grantee
may
incur a substantial tax liability. Grantee
assumes
full responsibility for all such consequences and the filing of all tax returns
and elections the Grantee 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, Grantee
agrees
that the Company may determine such value and that Grantee
will
observe any determination so made by the Company in all returns and elections
filed by Grantee.
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, Grantee
agrees
that the Company may withhold such taxes from any monetary amounts otherwise
payable by the Company to Grantee
and
that, if such amounts are insufficient to cover the taxes required to be
collected by the Company, Grantee
will pay
to the Company such additional amounts as are required.
(d) No
Registration Obligation.
The
Company will be under no obligation to register the Securities or to comply
with
any exemption available for sale of the Securities by Grantee
without
registration, and the Company 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 Securities by Grantee.
(e) Underwriter
Restrictions.
In the
event any underwriter of securities of the Company requests Grantee
to sign
any agreement restricting resale of the Securities in connection with any public
offering by the Company, Grantee
agrees
to sign such agreement, provided the officers of the Company have signed an
agreement no less restrictive. The Company may instruct its transfer agent
not
to transfer the Securities if requested by an underwriter as described
above.
(f) Compliance
with Securities Laws.
Grantee
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
Grantee
and for
one (1) year thereafter. The Company may impose stop transfer restrictions
with
respect to the Securities to enforce this provision.
(g) 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 Grantee
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.
For a
period of one (1) year following the date of this Agreement, the Grantee 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 Securities as follows:
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(i)
One-third
of the Securities as of the date of this Agreement;
(ii)
One-third
of the Securities as of the first anniversary of the date of this Agreement;
and
(iii)
One-third
of the Securities as of the second anniversary of the date of this
Agreement.
Provided,
however, that this restriction shall lapse with respect to an increment as
specified only if Grantee is employed with 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.
(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
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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 Grantee 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
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shall be forfeited by Grantee and reacquired by the Company on such date. Upon
such date, Grantee shall have no further rights to any Securities to which
the
restriction has not lapsed.
6. Rights
as Stockholder.
Grantee
shall have all rights as a stockholder with respect to the Securities;
provided,
however,
any
dividends or distributions on the Securities shall be 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
Grantee 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 Grantee, Grantee’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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of the page intentionally left blank.]
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IN
WITNESS WHEREOF, Grantee has executed this Restricted Stock Agreement effective
as of the date first written above.
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GRANTEE:
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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:__________________
Address:_____________________
_____________________
_____________________
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