5.5 Deposit of Unvested Shares. Upon issuance of the Restricted Shares pursuant to Section 2 of this Agreement, Executive shall deposit or cause to be deposited with the Company, or such person or entity as the Company may designate in writing, the certificate or certificates (as the case may be) representing all of the Unvested Shares, together with a stock assignment separate from certificate duly executed by Executive in blank, which shall be held by the Company or such designated person, as the case may be, until such Unvested Shares have become Vested Shares.
5.6 Dividends and Distributions. If the Company pays any dividends or distributions, whether in cash, stock or other property, to all of the holders of the Company’s outstanding shares of common stock at a time when any of the Restricted Shares are Unvested Shares, then the dividends or distributions that would become payable at that same time on the Restricted Shares (the “Restricted Share Dividends”) will be paid to Executive as follows:
(a) Restricted Share Dividends that are declared and will become payable by the Company between July 17, 2010 and June 30, 2011, inclusive, will be paid to the Executive as follows:
(i) In the case of those Unvested Shares that, subject to satisfaction of the applicable Vesting Conditions, will become Vested Shares on June 30, 2011: As and when the dividends are paid by the Company on all of its outstanding shares; and
(ii) In the case of those of the Unvested Shares that, subject to satisfaction of the applicable Vesting Conditions, would become Vested Shares on June 30, 2012: On or within 10 days of July 1, 2011; and
(iii) In the case of those of the Unvested Shares that, subject to satisfaction of the applicable Vesting Conditions, would become Vested Shares on June 30, 2013: On or within 10 days of July 1, 2012.
(b) Restricted Share Dividends that are payable between July 1, 2011 and June 30, 2012, inclusive, will be paid to the Executive as follows:
(i) In the case of those Unvested Shares that, subject to satisfaction of the applicable Vesting Conditions, would become Vested Shares on June 30, 2012: As and when declared by the Company; and
(ii) In the case of those of the Unvested Shares that, subject to satisfaction of the applicable Vesting Conditions, would become Vested Shares on June 30, 2013: On or within 10 days of July 1, 2012.
(c) Restricted Share Dividends that become payable between July 1, 2012 and June 30, 2013 on those of the Unvested Shares that, subject to satisfaction of the applicable Vesting Conditions, would become Vested Shares on June 30, 2013 will be paid as and when paid to shareholders generally.
(d) Any Restricted Share dividends that are declared prior to, but are not paid until after, any vesting date, will be paid only on those of the Unvested Shares that become Vested Shares on that vesting date or which the Company elects not to reacquire pursuant to Section 5.1 hereof, but shall not be paid any on of the Unvested Shares that became subject to the Company’s Reacquisition Right on that vesting date and are reacquired by the Company pursuant to Section 5.1 hereof.
Pending their payment, any Restricted Share Dividends that will not be paid as and when the corresponding dividends are paid to shareholders generally will be deposited in a segregated bank account maintained on the Company’s behalf by the transfer agent for the Company’s common stock or a bank or other depository institution as may be designated by the Company. Notwithstanding anything to the contrary that may be set forth in this Section 5.5 above, however, in no event shall any dividends or distributions be paid on any Restricted Shares that are reacquired by the Company pursuant to Section 5.1 above.
5.7 Voting Rights. Unless and until any Unvested Shares are reacquired pursuant to Section 5.1 hereof, Executive (or any of his Permitted Assigns, as the case may be) shall be entitled to vote such Unvested Shares to the same extent as if they were Vested Shares.
5.8 Assignment by the Company. The Company may assign its Reacquisition Right, in whole or in part, without the consent of the Executive, to any person or entity (a “Company Assignee”). In the event of any such assignment, the Company shall give written notice thereof to Executive, provided that the failure to give such notice shall not invalidate any such assignment or preclude the exercise of the Company’s Reacquisition Rights or any other of the Company’s rights hereunder by any such Company Assignee.
6. Restrictions on Transferability of the Unvested Shares. Unvested Shares may not be sold, transferred, pledged or hypothecated, or otherwise disposed of or encumbered, except that Unvested Shares may be transferred to Executive’s estate or heirs upon his death in accordance with the laws of descent and distribution or to his former spouse (if any) pursuant to a qualified domestic relations order issued by a court in settlement of marital property rights (each such person to whom any of the Unvested Shares are transferred, a “Permitted Assign”). Any Unvested Shares that are transferred to a Permitted Assign, as provided in this Section 6, shall remain subject to all of the terms, conditions and restrictions of this Agreement, including the Company’s Reacquisition Rights under Section 5 and any Permitted Assign shall, as a condition precedent to the effectiveness of any such transfer of any of the Unvested Shares, execute and deliver to the Company an instrument, in a form reasonably acceptable to the Company, by which such Permitted Assign shall agree to comply with, and which shall provide that the Unvested Shares being assigned or transferred to the Permitted Assign shall remain subject to, all of the terms, restrictions and conditions of, this Agreement, including the Company’s Reacquisition Right. If the foregoing condition to any such transfer is not satisfied, then such purported transfer to such Permitted Assign shall be null and void ab initio and of no force
or effect and the Company shall not be required to recognize such assignment or transfer. Any stock certificates evidencing any Unvested Shares to be reissued in the name of any Permitted Assign shall bear a restrictive legend substantially in the form of Exhibit B hereto for so long as such Restricted Shares remain Unvested Shares and, upon the issuance of a stock certificate or certificates for such Unvested Shares in the name of the Permitted Assign, such stock certificate(s), together with a stock assignment separate from certificate duly executed, in blank, by such Permitted Assign, shall be deposited with the Company or its designee as provided in Section 5.5(a) above.
7. Issuance of Certificates Upon Vesting of Restricted Shares. If any of the Unvested Shares have become Vested Shares, then, as soon as practicable thereafter, the Company shall issue or cause to be issued to Executive or his Permitted Assigns (if any) one or more stock certificates, in the name of the Executive or such Permitted Assigns (as the case may be), evidencing his or such Permitted Assigns’ ownership of those Vested Shares, free of the restrictive
legend set forth in Exhibit B hereto; provided, however, that if Executive or any such Permitted Assign is a director or executive officer of, or owns beneficially, more than 10% of the Company’s outstanding shares of common stock, at the Company’s election that certificate may bear a legend to the effect that any sale, transfer, pledge or other disposition of any of such Vested Shares may be made only pursuant to a registration statement that has been filed with and declared effective by the Securities Exchange Commission under, or an exemption from the registration provisions of, the Securities Act of 1933, as amended, and in compliance with any applicable state securities laws.
8 . Adjustments Upon Changes in Capital Structure. In the event that the outstanding shares of common stock of the Company are hereafter increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of a recapitalization, stock split, combination of shares, reclassification, stock dividend, or other change in the capital structure of the Company, then Executive or his Permitted Assigns, if any, as the case may be, shall be entitled to exchange, for the stock ce
rtificate(s) evidencing the then Unvested Shares, new or additional or different shares of stock or securities, in order to preserve, as nearly as practical, but not to increase, the benefits of Executive or such Permitted Assigns under this Agreement, in accordance with the provisions of Section 11.1 of the Plan. Such new, additional or different shares shall be deemed “Unvested Shares” for purposes of this Agreement and subject to all of the terms and conditions hereof, including the Company’s Reacquisition Rights under Section 5 hereof.
9. Limitation of Company’s Liability for Nonissuance; Nonpermitted Transfers.
9.1 The Company agrees to use its reasonable best efforts to obtain from any applicable regulatory agency such authority or approvals as may be required in order to issue the Restricted Shares to Executive pursuant to this Agreement. The inability of the Company to obtain any such authority or any approvals which are deemed by the Company’s counsel to be necessary for the lawful issuance of the Restricted Shares hereunder and under the Plan shall relieve the Company of any liability in respect of the nonissuance of such Restricted Shares as to which such requisite authority or any such approvals have not been obtained.
9.2 Any purported sale or transfer of any of the Restricted Shares, whether by the Executive or any Permitted Assign thereof that does not comply with the requirements of this Agreement or violates the provisions of Section 6 hereof shall be null and void ab initio and of no force or effect and the Company shall not be required to: (i) transfer on its books any such Restricted Shares purported to have been so sold or transferred, or (ii) treat as the record or beneficial owner of such Restricted Shares, or to accord the right to vote or to pay dividends or other distributions to, any transferee to whom such Restricted Shares have been sold or transferred in violation of this Agreement.
10. Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed given when delivered personally or three (3) days after being deposited in the United States mail, as certified or registered mail, with postage prepaid, (or by such other method as the Administrator may from time to time deem appropriate), and addressed, if to the Company, at its principal place of business, Attention: the Chief Financial Officer, and if to the Executive, at his or her most recent address as shown in the employment or stock records of the Company.
11. Binding Obligations. All covenants and agreements herein contained by or on behalf of any of the parties hereto shall bind and inure to the benefit of the parties hereto and their successors and, in the case of the Company, any Company Assignees and, in the case of Executive, any of his Permitted Assigns.
12. Amendments and Waivers. This Agreement may not be amended, discharged or terminated other than by written agreement executed by the parties. No waiver by either party of any of its rights or the obligations of the other party under this Agreement shall be effective unless such waiver is set forth in a writing executed and delivered by the party purported to have granted such waiver and no failure or delay by a party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial written waiver of any right of the waiving party or any obligation of the other party preclude any other or further exerc
ise thereof or the exercise of any other right, power or privilege hereunder.
13. Assignment. Executive shall have no right, without the prior written consent of the Company, to (i) sell, assign, mortgage, pledge, grant options with respect to or otherwise transfer any interest or right created by or under this Agreement, or (ii) delegate any of his duties or obligations under this Agreement, except as otherwise permitted under and to the extent set forth in Section 6 hereof.
14. Severability. Should any provision or portion of this Agreement be held to be unenforceable or invalid for any reason, the remaining provisions and portions of this Agreement shall be unaffected by such holding and shall remain in full force and effect.
15. Counterparts. This Agreement may be executed in one or more counterparts, and each of such executed counterparts, and any photocopies or facsimile copies thereof, shall constitute an original of this Agreement, but all of which, when taken together, shall constitute one and the same instrument.
16. Applicable Law and Equitable Remedies. This Agreement shall be construed in accordance with the laws of the State of California without reference to choice of law principles, as to all matters, including, but not limited to, matters of validity, construction, effect or performance or non-performance (actual or alleged). In the event of a breach or threatened breach by Executive, or any of his Permitted Assigns, of any of their obligations under this Agreement, including any of the obligations set forth in Sections 5 and 6 of this Agreement, then, without limiting any other rights or remedies that the Company may have at law or in equity or otherwise
, the Company shall be entitled to obtain temporary, preliminary and permanent injunctive relief to cause Executive or his Permitted Assigns (as the case may be) to halt any such breach or to prevent any threatened breach from taking place, and an order of specific performance of the obligation or obligations being breached or threatened to be breached, without the necessity of having to post a bond or other security as a condition to the issuance or maintenance of any such equitable relief.
17. No Agreement to Employ. The right of the Company or any of its Affiliates to terminate, at will, the Executive’s employment with the Company or any such Affiliates at any time (whether by dismissal, discharge or otherwise), with or without Cause, is specifically reserved, subject to the provisions of Section 4.3 and the applicable terms of any other written employment or other agreements to which the Company and Executive may be a party.
18. “Market Stand-Off” Agreement. Executive agrees, and each of his Permitted Assigns, if any, will agree, in connection with any registration of the Company’s securities that, upon the request of the Company or the underwriters managing any public offering of the Company’s securities, Executive and any such Permitted Assign will not sell or otherwise dispose, in whole or in part, of any of the Restricted Shares issued hereunder, whether Vested or Unvested, without the prior written consent of the Company or such underwriters, as the case may be, for a period of time (not to exceed 180 days) from the effective date of such registration as the Co
mpany or the underwriters may specify.
19. Receipt of Plan; Entire Agreement. Executive represents that he has received a copy, and is familiar with the terms and provisions, of the Plan. This Agreement, together with the Exhibits hereto and the applicable provisions of the Plan, constitute the entire agreement and understanding of the Company and Executive with respect to, and supersede all other contemporaneous or prior agreements and understandings, oral or written, between the Company and Executive relating to, the subject matter of this Agreement. In the event of any conflict between any of the terms or provisions of this Agreement and any terms or provisions of the Pla
n, then, in such event, the terms of the Plan shall govern over the conflicting terms of this Agreement.
20. Tax Elections. Executive understands that Executive (and not the Company) shall be responsible for the Executive’s own tax liability that may arise as a result of the acquisition or vesting of any of the Restricted Shares. Executive acknowledges and represents and warrants that (i) the Company is not providing and has not provided any tax advice to Executive with respect to the acquisition by Executive of the Restricted Shares or any tax elections available to him in respect thereof and he is relying solely on his own personal tax advisors for such a
dvice; (ii) Executive has considered the advisability of all tax elections in connection with the acquisition of the Restricted Shares, including the making of an election under Section 83(b) under the Internal Revenue Code of 1986, as amended (“Code”); and (iii) the Company has no responsibility for the making of such Section 83(b) election or any other tax elections, whether under federal or state laws or regulations. In the event Executive determines to make a Section 83(b) election, Executive agrees to timely provide a copy of that election to the Company as required under the Code.
21. Attorneys’ Fees. If any party shall bring an action in law or equity against the other to enforce or interpret any of the terms, covenants and provisions of this Agreement, the prevailing party in such action shall be entitled to recover reasonable attorneys’ fees and costs from the other party.
[Signatures of the parties follow on next page.]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
DEFINITIONS OF GOOD REASON ACTION AND MISCONDUCT
For purposes of this Agreement the following terms shall have the respective meanings set forth below:
1. The term “Good Reason Action” shall mean the occurrence of any of the following:
(a) Reduction or Adverse Change of Authority and Responsibilities. The Employer Entity (whether that is the Company or any Affiliate thereof) materially reduces Executive's authority, duties or responsibilities with the Employer Entity, unless such reduction is made as a consequence of (i) any acts or omissions of Executive which would entitle Employer to terminate Executive’s employment for Misconduct (as defined below in this Exhibit A), or (ii) Executive’s permanent disability, as defined in Section 22(e)(3) of the Code);
(b) Material Reduction in Salary. The Company or Employer Entity materially reduces Executive's base salary or base compensation below the amount thereof as in effect on the day prior to the such action, unless such reduction is made (i) as part of an across-the-board cost-cutting measure that is applied equally or proportionately to all senior executives of the Employer Entity, rather than discriminatorily against Executive, or (ii) as a result of any acts or omissions of Executive which would entitle Employer to terminate Executive’s employment for Misconduct, or (iii) by and at the election of the Employer as a result of Executive’s disability;
(c) Relocation. Company or Employer Entity relocates Executive’s principal place of employment to an office (other than the headquarters offices of the Company or the Employer Entity) located more than thirty (30) miles from Executive’s then principal place of employment (other than for temporary assignments or required travel in connection with the performance by Executive of his duties for the Employer Entity); or
(d) Breach of Material Employment Obligations. The Company or the Employer Entity (if other than the Company) commits a breach of any of its material obligations to Executive under this Agreement or there is a breach by the Company or the Employer Entity of any of such party’s material obligations under any employment agreement it may have with Executive as of the date of this Agreement or at any time thereafter, which breach continues uncured for a period of thirty (30) days following written notice thereof from Executive.
PROVIDED, HOWEVER, that, notwithstanding anything to the contrary that may be contained above in this Section 1 or elsewhere in this Agreement the following conditions must be satisfied in order for such termination of employment to constitute a Termination for Good Reason and for the Unvested Shares to become Vested Shares by reason of the taking or occurrence of any of the Good Reason Actions set forth above: (i) Executive shall not have consented to the taking of any such Good Reason Action by the Company or the Employer Entity (as the case may be), (ii) within ten (10) calendar days immediately following the date that Executive is first notified in writing by the Company or such o
ther Employer Entity (as the case may be) of the taking of such Good Reason Action, Executive shall have given Employer a Good Reason Termination Notice (as hereinafter defined), (iii) the Company or the Employer Entity (if other than the Company) shall not have rescinded, or cured the adverse effects on Executive of, such Good Reason Action within a period of thirty (30) consecutive calendar days following the Company’s receipt of such Good Reason Termination Notice (the “Cure Period”), (iv) Executive shall have, in fact, terminated his employment with the Company or the Employer Entity, as the case may be, and ceased altogether his Continuous Service with the Company and its Affiliates within ten (10) calendar days after the expiration of the Cure Period, and (v) neither the Company or the Employer Entity is required to take any of the above-described Good Reason Actions in order to comply with any applicable laws or government regulations or any order, ruling, instruction
or determination of any court or other tribunal or any government agency having jurisdiction over the Company or any of its Affiliates.
2. The term “Good Reason Termination Notice” shall mean a written notice from Executive to the Company stating that he is terminating his Employment with the Employer Entity for Good Reason and also ceasing his Continuous Service with the Company and any of its Affiliates, and describing in reasonable detail the Good Reason Action (as defined above) that has led Executive to terminate his employment with the Company or other Employer Entity (as the case may be) for Good Reason.
3. The term “Misconduct” shall mean:
(a) The commission of any act of fraud, embezzlement or dishonesty by Executive which materially and adversely affects the business of the Company or any of its Affiliates;
(b) Any unauthorized use or disclosure by Executive of confidential information or trade secrets of the Company or any of its Affiliates;
(c) The voluntary resignation by Executive of his employment with the Company and any Affiliates of the Company or the refusal by Executive to perform any material duties required of him if such duties are consistent with duties customary for the position that he holds with the Company or any Affiliate thereof;
(d) Any material act or omission by Executive involving gross negligence or intentional misconduct in the performance of Executive’s duties to, or material deviation from any of the policies or directives of, the Company or the acquiring or successor entity (or parent or any subsidiary thereof) that adversely affects the business or public reputation of the Company or any of its Affiliates;
(e) Conduct on the part of Executive which constitutes the breach of any statutory or common law duty of loyalty to the Company or any of its Affiliates; or
(f) Any illegal act by Executive which materially and adversely affects the business or business reputation of the Company or any of its Affiliates or any felony committed by Executive, as evidenced by his conviction thereof or a plea of nolo contendere by Executive.
The definition of Misconduct shall not limit the grounds on which or the reasons for which the Company or any of its Affiliates may terminate Executive’s employment or his Continuous Service.
FORM OF RESTRICTIVE LEGEND
THE TRANSFERABILITY OF THE SHARES REPRESENTED BY THIS STOCK CERTIFICATE IS RESTRICTED UNDER, AND SUCH SHARES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF, EITHER IN WHOLE OR IN PART, EXCEPT AS AND TO THE LIMITED EXTENT PERMITTED BY, THAT CERTAIN RESTRICTED STOCK AGREEMENT, DATED AS OF JULY 16, 2010, BETWEEN THE ISSUER OF THE SHARES AND THE HOLDER THEREOF, AND ANY ATTEMPTED SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION OF ANY OF THE SHARES NOT IN STRICT COMPLIANCE WITH THE PROVISIONS OF THAT AGREEMENT SHALL CONSTITUTE A BREACH OF THAT AGREEMENT AND SHALL BE VOID AND INEFFECTIVE TO CONVEY ANY RIGHT, TITLE OR INTEREST, OF ANY KIND OR NATURE, IN OR TO ANY OF THE SHARES.