NAPSTER, INC. RESTRICTED STOCK AWARD AGREEMENT
NAPSTER,
INC.
2001
STOCK PLAN
THIS
RESTRICTED STOCK AWARD AGREEMENT (this
“Agreement”) is
dated as of [____________,
2005] (the
“Award
Date”) by and
between Napster, Inc., a Delaware corporation (the “Corporation”), and
[______________] (the
“Participant”).
W
I T N E S S E T H
WHEREAS,
pursuant to the Napster, Inc. 2001 Stock Plan, as amended and restated August
15, 2003 (the “Plan”), the
Corporation hereby grants to the Participant, effective as of the date hereof, a
restricted stock award (the “Award”), upon
the terms and conditions set forth herein and in the Plan.
NOW
THEREFORE, in
consideration of services rendered and to be rendered by the Participant, and
the mutual promises made herein and the mutual benefits to be derived therefrom,
the parties agree as follows:
1. Defined
Terms.
Capitalized terms used herein and not otherwise defined herein shall have the
meaning assigned to such terms in the Plan.
2. Grant. Subject
to the terms of this Agreement, the Corporation hereby grants to the Participant
an Award with respect to an aggregate of [________]
restricted shares of Common Stock of the Corporation (the “Restricted
Stock”).
3. Vesting.
[Subject to Section 8 below, the Award shall vest, and restrictions (other than
those set forth in Section 16 of the Plan) shall lapse, with respect to
one-fourth of the total number of shares of Restricted Stock (subject to
adjustment under Section 13 of the Plan) on each of the first, second,
third and fourth anniversaries of the Award Date.]
4. Continuance
of Employment. The
vesting schedule requires continued employment or service through each
applicable vesting date as a condition to the vesting of the applicable
installment of the Award and the rights and benefits under this Agreement.
Partial employment or service, even if substantial, during any vesting period
will not entitle the Participant to any proportionate vesting or avoid or
mitigate a termination of rights and benefits upon or following a termination of
employment or services as provided in Section 8(a) below or under the
Plan.
Nothing
contained in this Agreement or the Plan constitutes an employment or service
commitment by the Corporation, affects the Participant’s status as an employee
at will who is subject to termination without cause, confers upon the
Participant any right to remain employed by or in service to the Corporation or
any of its Subsidiaries, interferes in any way with the right of the Corporation
or any of its Subsidiaries at any time to terminate such employment or services,
or affects the right of the Corporation or any of its Subsidiaries to increase
or decrease the Participant’s other compensation or benefits. Nothing in this
paragraph, however, is intended to adversely affect any independent contractual
right of the Participant without his or her consent thereto.
1
5. Dividend
and Voting Rights. After
the Award Date, the Participant shall be entitled to cash dividends and voting
rights with respect to the shares of Restricted Stock subject to the Award even
though such shares are not vested, provided that such rights shall terminate
immediately as to any shares of Restricted Stock that are forfeited pursuant to
Section 8(a) below.
6. Restrictions
on Transfer. Prior
to the time that they have become vested pursuant to Section 13 of the Plan,
Section 3, Section 8(b), or Section 8(c), neither the Restricted Stock, nor any
interest therein, amount payable in respect thereof, or Restricted Property (as
defined in Section 9 hereof) may be sold, assigned, transferred, pledged or
otherwise disposed of, alienated or encumbered, either voluntarily or
involuntarily. The transfer restrictions in the preceding sentence shall not
apply to transfers to the Corporation.
7. Stock
Certificates.
(a) Book
Entry Form. The
Corporation shall issue the shares of Restricted Stock subject to the Award
either: (a) in certificate form as provided in Section 7(b) below; or (b) in
book entry form, registered in the name of the Participant with notations
regarding the applicable restrictions on transfer imposed under this
Agreement.
(b) Certificates
to be Held by Corporation; Legend. Any
certificates representing shares of Restricted Stock that may be delivered to
the Participant by the Corporation prior to vesting shall be redelivered to the
Corporation to be held by the Corporation until the restrictions on such shares
shall have lapsed and the shares shall thereby have become vested or the shares
represented thereby have been forfeited hereunder. Such certificates shall bear
the following legend:
“The
ownership of this certificate and the shares of stock evidenced hereby and any
interest therein are subject to substantial restrictions on transfer under an
Agreement entered into between the registered owner and Napster, Inc. A copy of
such Agreement is on file in the office of the Secretary of Napster,
Inc.”
(c) Delivery
of Certificates Upon Vesting.
Promptly after the vesting of any shares of Restricted Stock pursuant to Section
13 of the Plan, Section 3, Section 8(b), or Section 8(c), the Corporation shall,
as applicable, either remove the notations on any shares of Restricted Stock
issued in book entry form which have vested or deliver to the Participant a
certificate or certificates evidencing the number of shares of Restricted Stock
which have vested, in either case, less the number of shares required to be
withheld pursuant to Section 10 hereof. The Participant (or the beneficiary or
personal representative of the Participant in the event of the Participant’s
death or disability, as the case may be) shall deliver to the Corporation any
representations or other documents or assurances as the Corporation may
determine to be necessary or reasonably advisable in order to ensure compliance
with all Applicable Laws with respect to the grant of the Award and deliver of
shares of Common Stock in respect thereof. The shares so delivered shall no
longer be restricted shares hereunder.
(d) Stock
Power; Power of Attorney.
Concurrently with the execution and delivery of this Agreement, the Participant
shall deliver to the Corporation an executed stock power in the form attached
hereto as Exhibit
A, in
blank, with respect to such shares. The Corporation shall not deliver any share
certificates in accordance with this Agreement unless and until the Corporation
shall have received such stock power executed by the Participant. The
Participant, by acceptance of the Award, shall be deemed to appoint, and does so
appoint by execution of this Agreement, the Corporation and each of its
authorized representatives as the Participant’s attorney(s)-in-fact to effect
any transfer of unvested forfeited shares (or shares otherwise reacquired by the
Corporation hereunder) to the Corporation as may be required pursuant to the
Plan or this Agreement and to execute such documents as the Corporation or such
representatives deem necessary or advisable in connection with any such
transfer.
2
8. Effect
of Termination of Employment or Services or Change of
Control.
(a) Termination
of Employment or Services. Subject
to earlier vesting as provided in Section 13 of the Plan, Section 8(b), or
Section 8(c), and except as provided in Section 8(b) or Section 8(c), if the
Participant’s Continuous Status as an Employee or Consultant terminates, the
Participant’s shares of Restricted Stock (and related Restricted Property as
defined in Section 9 hereof) shall be forfeited to the Corporation to the extent
such shares have not become vested upon the date the Participant’s Continuous
Status as an Employee or Consultant terminates (regardless of the reason for
such termination, whether with or without cause, voluntarily or involuntarily,
or due to death or disability). Upon the occurrence of any forfeiture of shares
of Restricted Stock hereunder, such unvested, forfeited shares and related
Restricted Property shall be automatically transferred to the Corporation,
without any other action by the Participant (or the Participant’s beneficiary or
personal representative in the event of the Participant’s death or disability,
as applicable). No consideration shall be paid by the Corporation with respect
to such transfer. The Corporation may exercise its powers under Section 7(d)
hereof and take any other action necessary or advisable to evidence such
transfer. The Participant (or the Participant’s beneficiary or personal
representative in the event of the Participant’s death or disability, as
applicable) shall deliver any additional documents of transfer that the
Corporation may request to confirm the transfer of such unvested, forfeited
shares and related Restricted Property to the Corporation.
(b) Change
of Control. Subject
to Section 4 hereof and to earlier vesting as provided in Section 13 of the
Plan, in the event of a Change of Control of the Corporation, one-fourth of the
total number of shares of Restricted Stock that are unvested at the time of the
Change of Control of the Corporation (and related Restricted Property) and not
forfeited pursuant to Section 8(a) prior to the date of the Change of Control,
if any, shall become immediately vested and restrictions on such shares (other
than those set forth in Section 16 of the Plan) shall immediately lapse upon the
Change of Control. For example, if fifty percent (50%) of the initial number of
shares of Restricted Stock vest prior to the date of a Change of Control of the
Corporation and the balance of the shares of Restricted Stock remain outstanding
and otherwise unvested on the date of the Change of Control, upon the date of
the Change of Control an additional twelve and one-half percent (12.5%) of the
initial number of shares of Restricted Stock (that is, twenty-five percent (25%)
of the fifty percent (50%) that remained unvested as of the date of the Change
of Control) shall vest. In such circumstances, on the twelve month anniversary
date (the “Anniversary Date”) following the date of the Change of Control of the
Corporation, one-fourth of the total number of shares of Restricted Stock that
are unvested at the time of such Anniversary Date (and related Restricted
Property) and not forfeited pursuant to Section 8(a) prior to the date of the
Change of Control, if any, shall become immediately vested and restrictions on
such shares (other than those set forth in Section 16 of the Plan) shall
immediately lapse upon such Anniversary Date. In the event of any accelerated
vesting pursuant to the foregoing provisions of this Section 8(b), any shares of
Restricted Stock (and related Restricted Property) that remain outstanding and
not vested following such acceleration shall otherwise continue to vest over the
remaining vesting schedule set forth in Section 3 (subject to (i) the
Participant remaining in Continuous Status as an Employee or Consultant, and
(ii) accelerated vesting as provided for in Section 13(c) of the Plan or Section
8(c)), with any accelerated vesting being deemed to have occurred pro-rata from
each remaining vesting date. The numbers of shares referred to in this Section
8(b) are subject to adjustment under Section 13 of the Plan.
3
(c) Notwithstanding
Section 8(a), if the Participant’s Continuous Status as an Employee or
Consultant is involuntarily terminated by the Corporation without Cause upon or
within twelve (12) months following a Change of Control of the Corporation, any
shares of Restricted Stock that are then-unvested (and related Restricted
Property) and not forfeited pursuant to Section 8(a) prior to the date of the
Change of Control shall immediately become fully vested and restrictions on such
shares (other than those set forth in Section 16 of the Plan) shall immediately
lapse upon such termination.
(d) The
acceleration provisions of Sections 8(b) and 8(c) are subject to the limitations
of Section 13(e) of the Plan.
9. Adjustments
Upon Specified Events. Upon
the occurrence of certain events relating to the Corporation’s stock
contemplated by Section 13(a) of the Plan, the Administrator shall make
adjustments if appropriate in the number and kind of securities that may become
vested under the Award. If any adjustment shall be made under Section 13(a) of
the Plan or an event described in Section 13(f)(i) of the Plan shall occur, or
if the Corporation makes an extraordinary distribution in respect of its Common
Stock (other than ordinary cash dividends provided for in Section 5 hereof), and
the shares of Restricted Stock are not fully vested upon such event or prior
thereto, the restrictions applicable to such shares of Restricted Stock shall
continue in effect with respect to any consideration or other securities or
other amount distributed by the Corporation (the “Restricted
Property” and,
for the purposes of this Agreement, “Restricted Stock” shall include “Restricted
Property”, unless the context otherwise requires) received in respect of such
Restricted Stock. Such Restricted Property shall vest at such times and in such
proportion as the shares of Restricted Stock to which the Restricted Property is
attributable vest, or would have vested pursuant to the terms hereof if such
shares of Restricted Stock had remained outstanding. To the extent that the
Restricted Property includes any cash, such cash shall be invested, pursuant to
policies established by the Administrator, in interest bearing, FDIC-insured
(subject to applicable insurance limits) deposits of a depository institution
selected by the Administrator, the earnings on which shall be added to and
become a part of the Restricted Property. The Board reserves the right to
accelerate the vesting of the Restricted Stock in such circumstances as it, in
its sole discretion, deems appropriate and any such acceleration shall be
effective only when set forth in a written instrument executed by an officer of
the Corporation.
4
10. Tax
Withholding. The
Corporation shall reasonably determine the amount of any federal, state, local
or other income, employment, or other taxes which the Corporation or any of its
Subsidiaries may reasonably be obligated to withhold with respect to the grant,
vesting, making of an election under Section 83(b) of the Code or other event
with respect to the Restricted Stock. The Corporation shall, to the extent the
Corporation reasonably determines is permitted by all Applicable Laws, withhold
and/or reacquire a sufficient number of shares of Restricted Stock that vest
pursuant to this Agreement, valued at their Fair Market Value on the applicable
vesting date, to satisfy the minimum amount of any such withholding obligations
that arise with respect to the vesting of such shares. The Corporation may take
such action(s) without notice to the Participant and shall remit to the
Participant in cash the balance of any proceeds from withholding and/or
reacquiring such shares in excess of the amount reasonably determined to be
necessary to satisfy such withholding obligations. The Participant shall have no
discretion as to the Corporation’s satisfaction of tax withholding obligations
in such manner. If, however, the Participant makes an election under Section
83(b) of the Code with respect to the Restricted Stock, if any other withholding
event occurs with respect to the Restricted Stock other than the vesting of such
shares, or if the Corporation is otherwise reasonably not able to satisfy the
withholding obligations with respect to the vesting of the Restricted Stock as
provided above in this Section 10, the Corporation (or any subsidiary of the
Corporation that employs the Participant, as applicable) shall be entitled to
require a cash payment by or on behalf of the Participant and/or to deduct from
other compensation payable to the Participant the amount of any such withholding
obligations.
11. Notices. Any
notice to be given under the terms of this Agreement shall be in writing and
addressed to the Corporation at its principal office to the attention of the
Secretary, and to the Participant at the Participant’s last address reflected on
the Corporation’s payroll records. Any notice shall be delivered in person or
shall be enclosed in a properly sealed envelope, addressed as aforesaid,
registered or certified, and deposited (postage and registry or certification
fee prepaid) in a post office or branch post office regularly maintained by the
United States Government. Any such notice shall be given only when received, but
if the Participant is no longer a Service Provider, shall be deemed to have been
duly given five business days after the date mailed in accordance with the
foregoing provisions of this Section 11.
12. Plan. The
Award and all rights of the Participant under this Agreement are subject to the
terms and conditions of the provisions of the Plan, incorporated herein by
reference. The Participant agrees to be bound by the terms of the Plan and this
Agreement. The Participant acknowledges having read and understanding the Plan,
the Prospectus for the Plan, and this Agreement. Unless otherwise expressly
provided in other sections of this Agreement, provisions of the Plan that confer
discretionary authority on the Board or the Administrator do not (and shall not
be deemed to) create any rights in the Participant unless such rights are
expressly set forth herein or are otherwise in the sole discretion of the Board
or the Administrator so conferred by appropriate action of the Board or the
Administrator under the Plan after the date
hereof.
13. Entire
Agreement. This
Agreement and the Plan together constitute the entire agreement and supersede
all prior understandings and agreements, written or oral, of the parties hereto
with respect to the subject matter hereof. The Plan may be amended pursuant to
Section 15 of the Plan. This Agreement may be amended by the Board from
time to time. Any such amendment must be in writing and signed by the
Corporation. Any such amendment that materially and adversely affects the
Participant’s rights under this Agreement requires the consent of the
Participant in order to be effective with respect to the Award. The Corporation
may, however, unilaterally waive any provision hereof in writing to the extent
such waiver does not adversely affect the interests of the Participant
hereunder, but no such waiver shall operate as or be construed to be a
subsequent waiver of the same provision or a waiver of any other provision
hereof.
5
14. Counterparts. This
Agreement may be executed simultaneously in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
15. Section
Headings. The
section headings of this Agreement are for convenience of reference only and
shall not be deemed to alter or affect any provision hereof.
16. Governing
Law. This
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Delaware without regard to conflict of law principles
thereunder.
6
IN
WITNESS WHEREOF, the
Corporation has caused this Agreement to be executed on its behalf by a duly
authorized officer and the Participant has hereunto set his or her hand as of
the date and year first above written.
NAPSTER,
INC.,
a
Delaware corporation
By:
_____________________________
Print
Name: _______________________
Its:
_____________________________
PARTICIPANT
________________________________
Signature
________________________________
Print
Name
7
CONSENT
OF SPOUSE
In
consideration of the execution of the foregoing Restricted Stock Award Agreement
by Napster, Inc., I, _____________________________, the spouse of the
Participant therein named, do hereby join with my spouse in executing the
foregoing Restricted Stock Award Agreement and do hereby agree to be bound by
all of the terms and provisions thereof and of the Plan.
Dated: _____________,
2005
______________________________________________
Signature
of Spouse
______________________________________________
Print
Name
8
EXHIBIT
A
STOCK
POWER
FOR VALUE
RECEIVED and pursuant to that certain Restricted Stock Award Agreement between
Napster, Inc., a Delaware corporation (the “Corporation”), and the individual
named below (the “Individual”) dated as of _____________, 2005, the Individual,
hereby sells, assigns and transfers to the Corporation, an aggregate ________
shares of Common Stock of the Corporation, standing in the Individual’s name on
the books of the Corporation and represented by stock certificate number(s)
_____________________________________________ to which this instrument is
attached, and hereby irrevocably constitutes and appoints _________________
____________________________________ as his or her attorney in fact and agent to
transfer such shares on the books of the Corporation, with full power of
substitution in the premises.
Dated
_____________, ________
______________________________________________
Signature
of Spouse
______________________________________________
Print
Name
(Instruction:
Please do not fill in any blanks other than the signature line. The purpose of
the assignment is to enable the Corporation to exercise its sale/purchase option
set forth in the Restricted Stock Award Agreement without requiring additional
signatures on the part of the Individual.)
