ImageWare Systems, Inc. 2001 Equity Incentive Plan Restricted Stock Bonus Agreement
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Exhibit 99.3
ImageWare Systems, Inc.
2001 Equity Incentive Plan
Restricted Stock Bonus Agreement
Pursuant to the terms of the Restricted Stock Bonus Grant Notice ("Grant Notice") and this Restricted Stock Bonus Agreement ("Agreement") (collectively, the "Award"), the par value of which is in consideration of your past services, ImageWare Systems, Inc. (the "Company") has awarded you this Award in the form of a stock bonus under its 2001 Equity Incentive Plan (the "Plan") for the number of shares of Common Stock as indicated in the Grant Notice. Defined terms not explicitly defined in this Agreement but defined in the Plan shall have the same definitions as in the Plan.
The details of your Award are as follows:
1. Vesting. Subject to the limitations contained herein, the shares of Common Stock subject to your Award will vest as provided in the Grant Notice, provided that, except as may be specifically provided otherwise in your Grant Notice, vesting will cease upon the termination of your Continuous Service.
2. Number of Shares. The number of shares of Common Stock subject to your Award may be adjusted from time to time for Capitalization Adjustments as described in subsection 11(a) of the Plan.
3. Securities Law Compliance. You will not be issued any shares of Common Stock under your Award unless the shares are either (a) then registered under the Securities Act or (b) the Company has determined that such issuance would be exempt from the registration requirements of the Securities Act. Your Award must also comply with other applicable laws and regulations governing the Award, and you will not receive any shares of Common Stock pursuant to your Award if the Company determines that such receipt would not be in material compliance with such laws and regulations.
4. Market-Stand Off Agreement. You agree that the Company (or a representative of the underwriters) may, in connection with any underwritten registration of the offering of any securities of the Company under the Securities Act, require that you not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to, any shares of Common Stock or other securities of the Company held by you under the Award, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the Securities Act. You further agree to execute and deliver such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to your Common Stock until the end of such period. The underwriters of the Company's stock are intended third party beneficiaries of this Section 4 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.
5. Limitations on Transfer. In addition to any other limitation on transfer created by applicable securities laws, you agree not to assign, hypothecate, donate, encumber or otherwise dispose of any interest in any of the shares of Common Stock held by you under the Award while such shares are subject to the Reacquisition Right (as defined in Section 6 below). After the shares have been released from the Reacquisition Right, you are free to assign, hypothecate, donate, encumber or otherwise dispose of any interest in such shares provided that any such actions are in compliance with the provisions herein and applicable securities laws.
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6. Right of Reacquisition.
(a) The Company shall have a Reacquisition Right (as defined below) as to the shares of Common Stock you acquire pursuant to your Award that have not as yet vested in accordance with the Vesting Schedule on the Grant Notice (the "Unvested Shares") on the following terms and conditions:
(i) The Company shall, simultaneously with termination of your Continuous Service, automatically reacquire for no consideration (monetary or otherwise) all of the Unvested Shares (the "Reacquisition Right"), unless the Company agrees to waive its Reacquisition Right as to some or all of the Unvested Shares. Any waiver of the Company's Reacquisition Right shall be exercised by the Company pursuant to written notice to the Escrow Agent (with a copy to you or your representative) delivered simultaneous with the Company's written notice to the Escrow Agent of your termination of Continuous Service and, upon receipt of any such waiver, the Escrow Agent may then release to you the number of Unvested Shares not being reacquired by the Company. If the Company does not waive its Reacquisition Right as to all of the Unvested Shares, then upon receipt of the Company's written notice of your termination of Continuous Service, the Escrow Agent automatically shall transfer to the Company the number of shares of Common Stock the Company is reacquiring.
(ii) The Unvested Shares shall be held in escrow pursuant to the terms of the Joint Escrow Instructions attached hereto as Attachment II.
(iii) You agree to: (A) execute three (3) copies of the Assignment Separate From Certificate (with date and number of shares of Common Stock left blank) substantially in the form of Attachment I to this Agreement, and (B) execute the Joint Escrow Instructions attached hereto as Attachment II, and to deliver executed copies of each to the Company on the Date of Grant indicated on your Grant Notice (or such other date as requested by the Company), along with the certificate or certificates evidencing the shares of Common Stock, all of which shall be for use by the Escrow Agent pursuant to the terms of the Joint Escrow Instructions.
(iv) The Company's right to reacquire the shares of Common Stock subject to your Award (and other property and securities received in connection therewith) pursuant to this Section 6 shall lapse at the rate at which the shares of Common Stock vest pursuant to the Vesting Schedule set forth in the Grant Notice.
(v) Subject to the provisions of your Award (including, but not limited to, subparagraph 6(a)(vi) herein) and the Plan, during the term of your Award you shall exercise all rights and privileges of a shareholder of the Company with respect to the shares of Common Stock deposited in escrow. Subject to the provisions of subparagraph 6(a)(vi) herein, you shall be deemed to be the holder of the Unvested Shares for purposes of receiving any dividends which may be paid with respect to such shares and for purposes of exercising any voting rights relating to such shares even if some or all of such shares have not yet vested and been released from the Company's Reacquisition Right.
(vi) If, from time to time, there is any dividend or any Capitalization Adjustment as described in subsection 11(a) of the Plan, then in such event any and all new, substituted or additional securities (or other property or cash, as applicable) to which you are entitled by reason of your ownership of the Unvested Shares shall be immediately subject to the Reacquisition Right with the same force and effect as the Unvested Shares subject to this Reacquisition Right immediately before such event.
(vii) If at any time during the term of the Reacquisition Right, a Corporate Transaction (as described in subsection 11(c) of the Plan) occurs, the Company may assign its
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Reacquisition Right to any successor of the Company, and any successor of the Company may assume this Award or substitute a similar stock award. If any surviving corporation or acquiring corporation refuses to assume this Award or substitute a similar stock award, the Reacquisition Right shall terminate immediately prior to the Corporate Transaction.
7. Restrictive Legends. The shares of Common Stock issued under your Award shall be endorsed with appropriate legends determined by the Company which may include, but shall not be limited to, the following:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A REACQUISITION RIGHT AND OTHER RESTRICTIONS AND CONDITIONS SET FORTH IN AN AWARD AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR SUCH HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS COMPANY. ANY TRANSFER OR ATTEMPTED TRANSFER OF ANY SHARES SUBJECT TO SUCH AWARD IS VOID WITHOUT THE PRIOR EXPRESS WRITTEN CONSENT OF THE COMPANY."
8. Award not a Service Contract. Your Award is not an employment or service contract, and nothing in your Award shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or an Affiliate, or on the part of the Company or an Affiliate to continue your employment. In addition, nothing in your Award shall obligate the Company or an Affiliate, their respective shareholders, boards of directors, Officers or Employees to continue any relationship that you might have as a Director or Consultant for the Company or an Affiliate.
9. Withholding Obligations.
(a) At the time your Award is made, at the time that some or all of the shares subject to your Award become vested, or at any time thereafter as requested by the Company, you hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if any, which arise in connection with your Award.
(b) Unless the tax withholding obligations of the Company and/or any Affiliate are satisfied, the Company shall have no obligation to either issue a certificate for the shares of Common Stock subject to your Award or approve the release of such shares of Common Stock from the escrow provided for herein.
10. Federal Tax Consequences. The acquisition and vesting of the shares of Common Stock subject to your Award may have adverse tax consequences to you that may be avoided or mitigated by filing an election under Section 83(b) of the Internal Revenue Code, as amended (the "Code"). Such election must be filed within thirty (30) days after the date of your Award. You acknowledge that the Company has directed you to seek independent advice regarding the applicable provisions of the Code, the income tax laws of any municipality, state or foreign country in which you may reside, and the tax consequences of your death. YOU FURTHER ACKNOWLEDGE THAT IT IS YOUR OWN RESPONSIBILITY, AND NOT THE COMPANY'S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(B), EVEN IF YOU REQUEST THE COMPANY TO MAKE THE FILING ON YOUR BEHALF.
11. Notices. Any notices provided for in your Award or the Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided to the Company.
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12. Miscellaneous.
(a) The rights and obligations of the Company under your Award shall be transferable to any one or more persons or entities, and all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by the Company's successors and assigns. Your rights and obligations under your Award may only be assigned with the prior written consent of the Company.
(b) You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of the Company to carry out the purposes or intent of your Award.
(c) You acknowledge and agree that you have reviewed your Award in its entirety, have had an opportunity to obtain the advice of counsel prior to executing and accepting your Award and fully understand all provisions of your Award.
13. Governing Plan Document. Your Award is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your Award, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of your Award and those of the Plan, the provisions of the Plan shall control.
Attachments to Restricted Stock Bonus Agreement:
I |
Assignment Separate From Certificate |
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II |
Joint Escrow Instructions |
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ATTACHMENT I
ASSIGNMENT SEPARATE FROM CERTIFICATE
For Value Received and pursuant to that certain Restricted Stock Bonus Grant Notice and Restricted Stock Bonus Agreement (together, the "Award"), [Participant's Name] hereby sells, assigns and transfers unto ImageWare Systems, Inc., a California corporation (the "Company") ( ) shares of the Common Stock of the Company, standing in the undersigned's name on the books of said corporation represented by Certificate No. delivered herewith and does hereby irrevocably constitute and appoint as attorney-in-fact to transfer the said stock on the books of the within named Company with full power of substitution in the premises. This Assignment may be used only in accordance with and subject to the terms and conditions of the Award, in connection with the reacquisition of shares of Common Stock of the Company issued to the undersigned pursuant to the Award, and only to the extent that such shares of Common Stock remain subject to the Company's Reacquisition Right under the Award.
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| Dated: | ||||||
| Signature: | ||||||
| [Participant's Name], Recipient |
Instruction: Please do not fill in any blanks other than the signature line. The purpose of this Assignment is to enable the Company (or its assignee) to exercise its reacquisition right set forth in the Award without requiring additional signatures on your part.
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ATTACHMENT II
JOINT ESCROW INSTRUCTIONS
[date]
Corporate
Secretary
ImageWare Systems, Inc.
00000 Xxxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
Dear Sir/Madam:
As Escrow Agent for both ImageWare Systems, Inc., a California corporation (the "Company"), and the undersigned recipient of stock of the Company ("Recipient"), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of that certain Restricted Stock Bonus Grant Notice ("Grant Notice"), dated , 2001 and that certain Restricted Stock Bonus Agreement ("Agreement") attached thereto, in accordance with the following instructions:
1. In the event Recipient's Continuous Service (as defined in the Plan) ceases during the vesting period set forth in the Grant Notice, the Company (or its assignee) will provide you with written notice of such Recipient's termination of service and, if applicable, notice of the Company's intent to waive its Reacquisition Right with respect to all or any part of the Unvested Shares (as defined in the Agreement). Unless you receive written notice from the Company stating that the Company intends to waive its Reacquisition Right (as described in the Agreement) with respect to all or any part of the Unvested Shares (as defined in the Agreement) (in which case the number of shares transferred shall be as indicated in such notice), then, as of the date you receive written notice of the Recipient's termination of service as described herein, the Company shall automatically reacquire all of the Unvested Shares (as defined in the Agreement) and you are directed to automatically and simultaneously (unless the Company requests in writing that the actions contemplated herein occur at a later date following Recipient's termination of service): (a) date the stock assignments necessary for the transfer in question, (b) fill in the number of shares of Common Stock (as defined in the Agreement) being transferred (which shall be all of the Unvested Shares as defined in the Agreement unless the Company has elected to waive its Reacquisition Right with respect to any portion of the Unvested Shares), and (c) deliver the same, together with the certificate evidencing the shares of Common Stock to be transferred, to the Company.
2. Recipient and the Company hereby irrevocably authorize and direct you to effectuate the transfer described above in accordance with the terms set forth herein and in the Agreement without further action by either Recipient or the Company (other than the written notice of termination as described above).
3. Recipient irrevocably authorizes the Company to deposit with you any certificates evidencing shares of Common Stock to be held by you hereunder and any additions and substitutions to said shares of Common Stock as specified in the Grant Notice and in the Agreement. Recipient does hereby irrevocably constitute and appoint you as Recipient's attorney-in-fact and agent for the term of this escrow to execute with respect to such securities (and any other securities or property acquired in connection therewith) all documents of assignment and/or transfer and all stock certificates necessary or appropriate to make all securities negotiable and complete any transaction herein contemplated.
4. This escrow shall terminate upon the earliest of (i) the complete vesting of the shares of Common Stock subject to the Award, (ii) the return to the Company of the Unvested Shares (as
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defined in the Agreement), (iii) the Company's waiver (in writing) of its right to reacquire the Unvested Shares, or any combination of (i), (ii) and/or (iii), provided that any such combination of (i), (ii) and/or (iii) represents the total number of shares of Common Stock issued pursuant to the Award.
5. If at the time of termination of this escrow you should have in your possession any documents, securities, or other property belonging to Recipient, you shall deliver all of same to any pledgee entitled thereto or, if none, to Recipient and shall be discharged of all further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties or their assignees. You shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for Recipient while acting in good faith and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law, and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. In case you obey or comply with any such order, judgment or decree of any court, you shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity, authority or rights of the parties executing or delivering or purporting to execute or deliver the Grant Notice or any documents or papers deposited or called for hereunder.
10. You shall not be liable for the outlawing of any rights under any statute of limitations with respect to these Joint Escrow Instructions or any documents deposited with you.
11. You shall be entitled to employ such legal counsel, including but not limited to Xxxxxx Godward llp, and other experts as you may deem necessary properly to advise you in connection with your obligations hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor.
12. Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be Secretary of the Company or if you shall resign by written notice to each party. In the event of any such termination, the Company may appoint any officer or assistant officer of the Company as successor Xxxxxx Agent and Recipient hereby confirms the appointment of such successor or successors as his attorney-in-fact and agent to the full extent of your appointment.
13. If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities, you may (but are not obligated to) retain in your possession without liability to anyone all or any part of said securities until such dispute shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings.
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15. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in any United States Post Box, by registered or certified mail with postage and fees prepaid, addressed to each of the other parties hereunto entitled at the following addresses, or at such other addresses as a party may designate by ten (10) days' written notice to each of the other parties hereto:
| Company: | IMAGEWARE SYSTEMS, INC. 00000 Xxxxxxxxx Xxxx Xxx Xxxxx, XX 00000 Attn: President and Secretary |
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| Recipient: | ||
| Escrow Agent: | IMAGEWARE SYSTEMS, INC. 00000 Xxxxxxxxx Xxxx Xxx Xxxxx, XX 00000 Attn: Corporate Secretary |
16. By signing these Joint Escrow Instructions you become a party hereto only for the purpose of said Joint Escrow Instructions; you do not become a party to the Grant Notice or the Agreement.
17. This instrument shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns. It is understood and agreed that references to "you" or "your" herein refer to the original Escrow Agent and to any and all successor Escrow Agents. It is understood and agreed that the Company may at any time or from time to time assign its rights under the Grant Notice, the Agreement and these Joint Escrow Instructions in whole or in part.
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| Very truly yours, | ||||
ImageWare Systems, Inc. |
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| By: | ||||
Recipient |
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| [Participant's Name] | ||||
| Escrow Agent: | ||||
| Secretary, | ||||
| IMAGEWARE SYSTEMS, INC. | ||||
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ImageWare Systems, Inc. 2001 Equity Incentive Plan Restricted Stock Bonus Agreement
ATTACHMENT I ASSIGNMENT SEPARATE FROM CERTIFICATE
ATTACHMENT II JOINT ESCROW INSTRUCTIONS
