Exhibit 10.2
COGNITRONICS CORPORATION
RESTRICTED STOCK AGREEMENT
This Agreement (this "Agreement") is made as of August 16, 2006 (the
"Date of Grant"), by and between Cognitronics Corporation, a New York
corporation (the "Company"), and Xxxxxxx Xxxxxxxx (the "Grantee") as a
material inducement to Grantee becoming a senior executive of the Company.
The parties acknowledge that this Agreement is subject to the filing and
approval of an Additional Listing Application with the American Stock
Exchange and that the issuance of the Restricted Shares (as defined below)
is subject to such filing and approval ("AMEX Approval").
1. Grant of Restricted Stock. Subject to and upon the terms,
conditions, and restrictions set forth in this Agreement, the Company
hereby grants to the Grantee, Two Hundred Thousand (200,000) shares of
common stock of the Company. These shares are referred to in this
Agreement as "Restricted Shares" during the applicable Restriction Period
(as defined in paragraph 4(c) hereof). Acceptance of the Restricted
Shares shall be deemed to be agreement by the Grantee to the terms and
conditions set forth in this Agreement. Certificates representing the
Restricted Shares may not be sold or otherwise transferred and must be
held by the Grantee until the end of the applicable Restriction Period.
Until such terms and conditions have lapsed with respect to any Restricted
Shares, the certificate for such shares will, at the Company's option,
remain in the physical possession of the Company or bear a legend to the
effect that they were issued or transferred subject to, and may be sold or
otherwise disposed of only in accordance with, the terms of this
Agreement.
2. Stockholder Status. Effective upon the later of Date of Grant or
the date of AMEX Approval, the Grantee will be a holder of record of the
Restricted Shares and will have all rights of a stockholder with respect
to such shares (including the right to vote such shares at any meeting of
stockholders of the Company and the right to receive all dividends paid
with respect to such shares), subject only to the terms and conditions
imposed by this Agreement.
3. Effect of Changes in Capitalization. The number of Restricted
Shares are subject to adjustment for stock splits, stock dividends and the
like. Any additional or different shares or securities issued as the
result of such an adjustment will be held or delivered in accordance with
this Agreement and will be deemed to be included within the term
"Restricted Shares".
4. Lapse of Restrictions.
(a) The restrictions set forth in paragraph 5 below will lapse
with respect to 100% of the Restricted Shares on the fourth anniversary of
the Date of Grant.
(b) Notwithstanding paragraph 4(a), the restrictions set forth in
paragraph 5 below will lapse on all Restricted Shares at the close of
business on the date on which a Change in Control of the Company (as
defined below in this paragraph 4(b)) shall occur. For purposes of this
Agreement, a "Change in Control" will occur (a) upon the public
announcement that any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of the
stock of the Company) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company representing 30% or more of the combined voting power of
the Company's then outstanding securities, (b) if, during any period of
two consecutive years, individuals who at the beginning of such period
constitute the Company's Board of Directors (the "Board"), and any new
director (other than a director designated by a person that has entered
into an agreement with the Company to effect a transaction described in
clause (a), (c) or (d) of this sentence) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least 2/3 of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to
constitute at least a majority thereof, (c) if the stockholders of the
Company approve a merger or consolidation of the Company with any other
corporation, other than (i) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than
75% of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (as defined above) acquires more than 30% of the combined voting
power of the Company's then outstanding securities, or (d) if the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets.
(c) As soon as practicable after the restrictions with respect to
any installment of Restricted Shares lapse at the end of the period
applicable to such installment set forth in paragraphs 4(a) and 4(b) above
(the "Restriction Period"), the Company will deliver to the Grantee, or
the Grantee's legal representative in case of the Grantee's death,
promptly after surrender of the Grantee's certificate(s) for the
Restricted Shares to the Treasurer of the Company, the certificate or
certificates for such shares free of any legend or further restrictions
together with, if applicable, a new certificate representing any remaining
Restricted Shares. It shall be a condition to the obligation of the
Company to issue or transfer shares of Common Stock upon the lapse of
restrictions that the Grantee (or any person entitled to act under this
paragraph 4(c)) pay to the Company, upon its demand, such amount as may be
requested by the Company for the purpose of satisfying its liability to
withhold federal, state or local income or other taxes by reason of such
issuance or transfer. If the amount requested is not paid, the Company
may refuse to issue or transfer shares of Common Stock.
5. Restrictions. During the Restriction Period, neither the Restricted
Shares nor any right or privilege pertaining thereto may be sold,
transferred, assigned, pledged, hypothecated or otherwise disposed of or
encumbered in any way, by operation of law or otherwise, and shall not be
subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of or encumber
the Restricted Shares or any right or privilege pertaining thereto,
otherwise than by will or by the laws of descent and distribution, or upon
the levy of any execution, attachment or similar process thereupon, the
Restricted Shares and all rights and privileges given hereby shall
immediately terminate and the Restricted Shares shall be forfeited to the
Company pursuant to paragraph 6 hereof.
6. Forfeiture.
(a) All the Grantee's rights to, and interest in, the Restricted
Shares shall terminate and be forfeited to the Company without payment of
consideration if either (i) the Grantee's employment by the Company or any
subsidiary thereof terminates (or, if the Grantee is no longer employed by
the Company but has become a consultant to the Company under a post-
employment consulting arrangement, such consulting arrangement terminates)
for any reason; provided, however, that the Grantee's employment will not
be deemed to have terminated for this purpose while the Grantee is on a
leave of absence which has been approved by the Company or while the
Grantee is serving as a consultant to the Company or any subsidiary
thereof under a post-employment consulting arrangement, or (ii) any action
prohibited by paragraph 5 hereof is taken. For purposes of this
Agreement, a transfer of employment from the Company to a subsidiary or
from a subsidiary to the Company or between subsidiaries shall not be
deemed a termination of employment.
(b) If Restricted Shares are forfeited for any of the reasons
stated in paragraph 6(a) hereof, such forfeiture shall be effective upon
the occurrence of the event giving rise to the forfeiture. The Grantee
agrees to repay to the Company all dividends, if any, paid after such
event with respect to the Restricted Shares which have been forfeited.
(c) If at any time the Grantee forfeits any Restricted Shares
pursuant to this Agreement, the Grantee agrees to return the certificate
or certificates for such Restricted Shares to the Company duly endorsed in
blank or accompanied by a stock power duly executed in blank.
(d) Determination as to whether an event has occurred resulting in
the forfeiture of, or lapse of restrictions on, Restricted Shares, in
accordance with this Agreement, shall be made by the Compensation
Committee of the Board (the "Committee"), and all determinations of the
Committee shall be final and conclusive.
7. Company Right to Terminate Employment and Other Remedies. Nothing
provided herein shall be construed to affect in any way the right or power
of the Company, subject to the provisions of any other written agreement
between the Grantee and the Company relating to the subject matter, to
terminate the Grantee's employment as an employee of or a consultant to
the Company at any time for any reason with or without cause, nor to
preclude the Company from taking any action or enforcing any remedy
available to it with respect to any action or conduct on the Grantee's
part.
8. Additional Documents.
(a) It is the intention of the Company that this award of
Restricted Shares shall meet the requirements of, and result in the
application of, the rules prescribed by Section 83 of the Internal Revenue
Code of 1986, as in effect at the date hereof, and applicable regulations
thereunder. Accordingly, each and every provision shall be construed and
interpreted in such manner as to conform with such intention and the
Company reserves the right to execute and to require the Grantee to
execute any further agreements or other instruments, which may be
effective as of the date of the award of the Restricted Shares covered by
this Agreement, including, but without limitation, any instrument
modifying or correcting any provision hereof, or any action taken
hereunder or contemporaneously herewith, and to take any other action,
which may be effective as of the date of the award of the Restricted
Shares covered by this Agreement, that, in the opinion of counsel for the
Company, may be necessary or desirable to carry out such intention.
(b) If the Grantee fails, refuses or neglects to execute and
deliver any instrument or document or to take any action requested by the
Company to be executed or taken by the Grantee pursuant to the provisions
of paragraph 8(a) above for a period of 30 days after the date of such
request, the Company may require the Grantee, within ten 10 days after
delivery to the Grantee of a written demand by the Company, to forfeit all
Restricted Shares then held by the Grantee.
9. Severability. In the event that one or more of the provisions of
this Agreement is invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated will be deemed to be separable
from the other provisions hereof, and the remaining provisions hereof will
continue to be valid and fully enforceable.
10. Interpretation. The Committee, as constituted from time to time,
will, except as expressly provided otherwise herein, have the right to
determine any questions or settle any ambiguities which arise in
connection with this Agreement and the Restricted Shares.
11. Successors and Assigns. Without limiting Section 4 hereof, the
provisions of this Agreement will inure to the benefit of, and be binding
upon, the successors, administrators, heirs, legal representatives and
assigns of the Grantee, and the successors and assigns of the Company.
12. Governing Law. The interpretation, performance and enforcement of
this Agreement will be governed by the laws of the State of New York,
without giving effect to the principles of conflict of laws thereof. Each
party to this Agreement hereby consents and submits himself, herself or
itself to the jurisdiction of the courts of the State of New York for the
purposes of any legal action or proceeding arising out of this Agreement.
13. Notices. Any notice to the Company provided for herein will be in
writing to the Company and any notice to the Grantee will be addressed to
the Grantee at his or her address on file with the Company. Except as
otherwise provided herein, any written notice will be deemed to be duly
given if and when delivered personally or sent by courier service,
registered mail or electronic means of communication, and addressed as
aforesaid. Any party may change the address to which notices are to be
given hereunder by notice to the other party as herein specified (provided
that for this purpose any mailed notice will be deemed given on the third
business day following deposit of the same in the mail).
[Signature page follows]
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officer and Grantee has also
executed this Agreement in duplicate, as of the day and year first above
written.
COGNITRONICS CORPORATION
By:/s/ Xxxxxxx Xxxxxxxx
-----------------------
Name: Xxxxxxx Xxxxxxxx
Title: Treasurer
The undersigned Grantee hereby acknowledges receipt of an executed
original of this Restricted Stock Agreement and accepts the Restricted
Shares granted hereunder, subject to the terms and conditions set forth
herein.
/s/ Xxxxxxx Xxxxxxxx
--------------------
Xxxxxxx Xxxxxxxx
