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EXHIBIT 10.1
TOROTEL, INC.
RESTRICTED STOCK AGREEMENT
This RESTRICTED STOCK AGREEMENT ("Agreement") is made with an
effective date of February 12, 2007 and is between Torotel, Inc., a
Missouri corporation (the "Company"), and E. Mark Flynn (the
"Employee").
The Company has determined that the interests of the Company and
its stockholders will be promoted by hiring talented individuals
for the Company and, to induce such individuals to accept
employment with the Company, the Company believes a key component
of such individuals’ compensation should be granting equity
ownership opportunities based upon the acceptance of employment and
the continuing employment of such individual.
The Employee is a recently hired key management employee of the
Company and will provide valuable services to the Company.
The Board of Directors (the "Board") has determined that to induce
the Employee to accept employment with the Company, it was
appropriate to grant to the Employee shares of Common Stock of the
Company subject to certain conditions and restrictions set forth in
this Agreement. The Board further determined that the value
of the Employee’s services less the compensation to be paid
to the Employee for such services equals the aggregate par value of
the Common Stock of the Company to be issued pursuant to this
Agreement and, therefore, has approved the issuance of shares of
Common Stock to the Employee under the terms and conditions set
forth herein..
THEREFORE, in consideration of the premises and the covenants
herein contained, and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree
as follows:
1.
Grant of Award . The Company hereby grants to the
Employee an award of Twenty Five Thousand (25,000) shares of Common
Stock, .01 par value per share, of the Company (the "Restricted
Shares"), subject to the restrictions, terms and conditions set
forth herein.
2.
Restrictions . Except as otherwise provided herein,
the Restricted Shares shall be subject to forfeiture and may not be
sold, transferred, pledged, assigned, encumbered or otherwise
alienated or hypothecated by the Employee unless and until the
Employee remains in the employ of the Company until the dates of
release as provided herein (the "Release Dates").
3.
Legend . Certificates for the Restricted Shares shall
be issued as soon as practicable in the name of the Employee and
shall be issued with a legend similar to the following:
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THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED
SECURITIES AND SUBJECT TO CERTAIN CONDITIONS UNDER THE APPLICABLE
RESTRICTED STOCK AGREEMENT DATED FEBRUARY 12, 2007. THESE
SHARES ARE SUBJECT TO A RISK OF FORFEITURE AND CANNOT BE SOLD,
DONATED, TRANSFERRED OR IN ANY OTHER MANNER ENCUMBERED EXCEPT IN
ACCORDANCE WITH THE TERMS OF SUCH AGREEMENT, A COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE
COMPANY.
4.
Release Dates . Based upon Employee attaining mutually
agreed upon written annual goals, the Restricted Shares shall be
released from the restrictions on transfer and risk of forfeiture
Five Thousand (5,000) Shares per Year for Five (5) years beginning
February 12, 2008 and each anniversary thereof. Accordingly,
as each of the Release Dates set forth below, that number Shares
set forth in the column "Number of Restricted Shares (Cumulative)
Released" shall reflect the total number of Shares vested at such
time:
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Release Date
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Number of Restricted Shares
(Cumulative) Released
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February 12, 2008
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5,000 Shares (1/5
th )
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February 12, 2009
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10,000 Shares (2/5
ths )
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February 12, 2010
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15,000 Shares (3/5
ths )
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February 12, 2011
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20,000 Shares (4/5
ths )
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February 12, 2012
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25,000 Shares (5/5
ths )
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5.
Effect of Termination of Employment; Forfeiture of Restricted
Shares .
(a) If the Employee ceases to be an employee of the
Company other than by reason of death, disability or termination by
the Company without Cause (as hereinafter defined) and prior to all
of the Restricted Shares having been released, all Restricted
Shares then still subject to restrictions under this Agreement
shall be forfeited and returned to the Company as of the date on
which such cessation of employment occurs. As used herein,
the term "disability" means a condition that, in the judgment of
the Board of Directors in its sole and exclusive discretion, has
rendered the Employee completely and presumably permanently unable
to perform the duties of his regular occupation. As used
herein, termination for "Cause" means (1) conviction of the
Employee for having committed a felony, (2) acts of dishonesty or
moral turpitude by the Employee which are materially detrimental
and adverse to the Company, (3) material breach of the
Employee’s duty of loyalty or other fiduciary duties to the
Company, (4) material failure by the Employee to obey the
lawful orders of the Board of Directors or (5) gross negligence or
intentional misconduct by the Employee in the performance of the
Employee’s obligations hereunder.
(b) If the Employee ceases to be an employee of the
Company by reason of death, disability or termination by the
Company without Cause (as defined above), and prior to all of the
Restricted Shares having been released, the Restricted Shares then
still subject to restrictions under this Agreement shall be
released and no longer subject to restrictions under this
Agreement
6.
Acceleration Upon Change in Control . If, prior to all
of the Restricted Shares having been released, the Company
undergoes a change in control (as defined below), then all of the
Restricted Shares shall be released and no longer subject to
restrictions under this Agreement. For purposes of this
Agreement,
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