YTBINTERNATIONAL, INC. RESTRICTEDSTOCK AWARD ATELECTION AWARD FOR NON-EMPLOYEE DIRECTORS

 

 

 

 

RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”) effective as of the 22nd day of June, 2009 by and between YTB INTERNATIONAL, INC., a Delaware corporation with principal executive offices located at 1901 East Edwardsville Road, Wood River, IL 62095 (the “Company”), and __________ (the “Grantee”), with an address at c/o YTB International, 1901 East Edwardsville Road, Wood River, IL 62095.

 

WHEREAS, on ___________ (the “Grant Date”), the  Board of Directors (the “Board”) of the Company granted to the Grantee a restricted stock award (the “Award”) in connection with the Grantee’s election to the Board on ____________;

 

WHEREAS, pursuant to the Company’s policy  of compensating its non-employee members of the Board, the Award shall consist of shares of the Company’s Class A common stock, $0.001 par value per share (“Class A Common Stock”), valued at $40,000, based on the Fair Market Value of the Class A Common Stock as of the Grant Date; and

 

WHEREAS, the Award shall be granted under the Company’s 2004 Stock Option and Restricted Stock Plan, as amended and restated (the “2004 Plan”) (all capitalized terms used herein and not otherwise defined shall have the meaning assigned thereto in the 2004 Plan).

 

NOW, THEREFORE, the Company and the Grantee, intending to be legally bound hereby, agree as follows:

 

 

(a)           Subject to the terms and conditions of the 2004 Plan and those set forth below in this Agreement, Grantee shall receive an Award of _______ shares of Class A Common Stock (the “Shares”).   The Award shall vest in accordance with Section 2 below.

 

(b)           The Award shall be administered and interpreted by the Board.  The Board may delegate its authority to a committee or subcommittee, which may consist of members of the Board.  Unless otherwise specified in this Agreement, the term “Board” shall include any committee or subcommittee to which the Board has delegated such authority.

 

(a)           Except as otherwise provided in this Agreement, the number of Shares constituting the Award shall vest ratably according to the vesting schedule set forth below; provided, however, that the Grantee has continued to serve as a director of the Company as of each Vesting Date set forth below.

 

 

(b)           Any unvested portion of the Award shall be immediately forfeited upon the Grantee’s failure for any reason to serve as a director of the Company.

 

 

(a)           The Grantee may not assign, transfer, pledge, or otherwise dispose of (any such action being hereinafter referred to as a “Disposition”) any unvested Shares or rights under this Agreement.  Any attempt to assign, transfer, pledge, or otherwise dispose of any unvested Shares or any rights under this Agreement contrary to the provisions hereof, and the levy of any execution, attachment, or similar process upon the unvested Shares, shall be null, void, and without effect and shall result in the immediate forfeiture to the Company without consideration of any unvested Shares. The Grantee acknowledges that the Shares are “control securities” under Rule 144 (“Rule 144”) promulgated under the Securities Act of 1933, as amended, and as such, understands that he or she must resell the Shares subject to all conditions and limitations set forth in Rule 144 applicable to control securities. The Grantee understands and agrees that the Company may require, as a condition to any Disposition of the Shares by the Grantee, that the Grantee furnish to the Company a representation letter and an opinion of counsel satisfactory to the Company that such Disposition is permissible under Rule 144.

 

(b)           The Grantee acknowledges that the Company’s Insider Trading Policy (the “Insider Trading Policy”) imposes restrictions upon the Disposition of the Shares and agrees that any Disposition is subject to the terms of the Insider Trading Policy, Rule 10b-5 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 16(b) of the Exchange Act.

 

(c)           Notwithstanding any other provision of this Agreement, the award, issuance, vesting and delivery to the Grantee of the Shares and any distributions thereon shall be subject to compliance with all applicable laws and regulations from time to time in effect and with the rules and regulations of any securities exchange on which securities of the Company may then be listed.  The Grantee hereby agrees to take any action and consents to the taking of any action by the Company, with respect to the Shares awarded hereunder, necessary to achieve compliance with such laws, regulations and rules.  Any determination by the Company with respect to the need for any action in order to achieve such compliance with laws, regulations or rules shall be final, binding and conclusive.

 

(d)           The Grantee hereby agrees to indemnify the Company and hold it harmless from and against any and all damages or liabilities incurred by the Company (including liabilities for attorneys’ fees and disbursements) arising out of any breach by the Grantee of this Agreement, including, without limitation, any attempted disposition of the Shares by the Grantee in violation of this Agreement, applicable securities law requirements, or the Insider Trading Policy.

(e)           The Grantee agrees that any legends required or deemed necessary or appropriate by the Company under federal or state securities laws, may be placed on the certificate(s) representing the Shares.  The following legend shall be placed on the Shares:

 

NOTICE IS HEREBY GIVEN THAT THE SHARES OF CLASS A COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE HELD SUBJECT TO, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, GIFTED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH, THE TERMS, CONDITIONS AND RESTRICTIONS SET FORTH IN THE AGREEMENT BETWEEN YTB INTERNATIONAL, INC. AND THE GRANTEE (THE “AGREEMENT”), A COPY OF WHICH IS ON FILE AT THE OFFICE OF YTB INTERNATIONAL, INC.  NO SUCH TRANSACTION SHALL BE RECOGNIZED AS VALID OR EFFECTIVE UNLESS THERE SHALL HAVE BEEN COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE AGREEMENT.  IN ADDITION, THE SHARES OF CLASS A COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE DEEMED “CONTROL” SECURITIES AND THEIR RESALE IS SUBJECT TO CERTAIN PROVISIONS OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

(f)           The Grantee hereby acknowledges that the Company will deliver certificates representing the Shares as such Shares vest in accordance with this Agreement.

 

(g)           The Grantee further understands and agrees that until the Shares vest, any distributions with respect to unvested Shares shall be paid to and held by the Company under and subject to the terms of this Agreement.  As soon as practicable after the date on which the Shares vest, the Company will cause to be paid or delivered to the Grantee (which payment or delivery may be by the U.S. mail at the last address for the Grantee indicated in the Company’s records), the distributions held by the Company with respect to such Shares, without interest thereon.  In the event and at the time any Shares are forfeited to the Company as provided in Section 2, all distributions held by the Company with respect to such forfeited Shares shall be forfeited to and revert to the Company.

 

 

(a)           Upon a Change in Control of the Company, the Board of Directors may, in its discretion, accelerate the vesting on all unvested Shares.

 

(b)           Upon a Change in Control where the Company is not the surviving corporation (or survives only as a subsidiary of another corporation), the Board may, in addition to any action taken pursuant to clause (a) above, take one or a combination of the following actions:  (i) replace all outstanding Awards that are not vested with comparable Awards by the surviving corporation (or a parent or subsidiary of the surviving corporation), or (ii) exchange outstanding unvested Shares for a payment by the Company in cash.

 

(c)           For purpose of this Agreement, a “Change in Control” of the Company means the determination (which may be made effective as of a particular date specified by the Board) by the Board, made by a majority vote that a Change in Control has occurred, or is about to occur.  Such a change shall not include, however, a restructuring, reorganization, merger, or other change in capitalization in which the persons who own an interest in the Company on the date hereof (the “Current Owners”) (or any individual or entity which receives from a Current Owner an interest in the Company through will or the laws of descent and distribution) maintain more than a 50% voting or economic interest in the resultant entity.  Regardless of the vote of the Board or whether or not the Board votes, a Change in Control shall be deemed to have occurred as of the first day if any one or more of the following subsections shall have been satisfied:

(i)           Any person (other than a person in control of the Company as of the effective date of this Agreement, or other than a trustee or other fiduciary holding securities under an Grantee benefit plan of the Company, or a company owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), becomes the beneficial owner, directly or indirectly, of securities of the Company representing more than thirty-five percent (35%) of the combined voting power of the Company’s then outstanding securities;

 

(ii)          individuals who, as of the effective date of this Agreement, constituted the Board (the “Incumbent Board”) cease for any reasons to constitute at least a majority of the Board; provided, that any person becoming a director subsequent to the effective date of this Agreement, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least three quarters of the directors comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Company) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board, or

 

(iii)         The stockholders of the Company approve:

 

 

(iv)          A merger, consolidation, or reorganization of the Company with or involving any other company, other than a merger, consolidation, or reorganization that 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) at least 50% of the combined voting power of the voting securities of the Company (or such surviving entity) outstanding immediately after such merger, consolidation, or reorganization.

 

 

(a)           The grant of the Award shall not confer upon the Grantee any right to continue to provide service to the Company and shall not interfere in any way with the right of Company to terminate the Grantee’s relationship with the Company.

 

(b)           The rights granted pursuant to the Award shall not afford Grantee any rights or additional rights to compensation or damages in consequence of the loss or termination of his relationship with the Company for any reason whatsoever.

 

(c)           Grantee shall not be entitled to any compensation or damages for any loss or potential loss which Grantee may suffer by reason of a forfeiture of the Award due to the termination of his relationship with the Company for any reason.

 

(a)           The Grantee acknowledges that any and all taxes, whether local, state, or federal, imposed as a result of this Award or any sums paid hereunder shall be borne by Grantee without reimbursement by the Company.

 

(b)           The Grantee understands that under Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”), the fair market value of the Shares on the date any forfeiture restrictions applicable to such Shares lapse will be reportable as ordinary income on such lapse date.  The Grantee understands that he may elect under Section 83(b) of the Code to be taxed at the Grant Date, rather than when such Shares ceases to be subject to such forfeiture restrictions.  Such election must be filed with the Internal Revenue Service within thirty (30) days after the date of this Agreement.  The form for making this election is attached as Exhibit A hereto.  GRANTEE UNDERSTANDS THAT FAILURE TO MAKE THIS FILING WITHIN THE THIRTY (30) DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME BY THE GRANTEE AS AND WHEN THE FORFEITURE RESTRICTIONS LAPSE.

 

(c)           GRANTEE ACKNOWLEDGES THAT IT IS GRANTEE’S SOLE RESPONSIBILITY, AND NOT THE COMPANY’S, TO FILE A TIMELY ELECTION UNDER SECTION 83(b), EVEN IF GRANTEE REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS BEHALF.  This filing should be made by registered or certified mail, return receipt requested, and Grantee must retain two (2) copies of the completed form for filing with his state and federal tax returns for the current tax year and an additional copy for his personal records.

 

(d)           Grantee agrees to hold harmless and indemnify the Company, any member of its Board of Directors and any equity holder from any and all Federal, state, local, withholding or employment tax  liability that may arise from this Agreement.

 

7.           No Shareholder Rights.  The Grantee shall not have any of the rights and privileges of a shareholder with respect to unvested Shares, except as otherwise provided herein.

 

8.           Governing Law.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to agreements made and to be performed entirely within such State, without regard to the conflicts of law principles of such State.

 

9.           Assignment and Transfers.  The Company may without the consent of the Grantee assign all of its rights and obligations under this Agreement to a wholly-owned subsidiary, a newly created legal entity (or a partnership controlled by the Company), subsidiaries of the Company or to a successor in interest to the Company which shall assume all obligations and liabilities hereunder.

 

IN WITNESS WHEREOF, the Company has caused its duly authorized officers to execute and attest this Agreement, and the Grantee has executed this Agreement, effective as of the date first written above.

 

I hereby accept the Award described in this Agreement, and I agree to be bound by the terms of the Agreement.  I hereby further agree that all the decisions and determinations of the Board shall be final, binding, and conclusive.

 

 

 

 

Pursuant to Section 83(b) of the Internal Revenue Code of 1986 (the “Code”), I hereby elect to have the value of the restricted property described below taxed at the time of transfer.

 

1.	Taxpayer’s name, identification (social security) number and address:

 

(a)

Name:  ________________

 

(b)

Identification Number:  ______________________________________________

 

(c)

Address:  _________________________________________________________

 

_________________________________________________________________

 

_________________________________________________________________

 

2.	Description of the restricted property:  xxx Shares of Class A Common Stock of YTB International, Inc. (the “Shares”).

 

3.	Date of transfer of the restricted property, and the taxable year for which this election is made:

(a)

Date of transfer:  ______________

 

(b)

Taxable year:  Calendar Year Ended:  _________.

 

4.	Nature of the restriction:  The Shares are subject to a four (4) year vesting period.

 

5.	Fair market value of the restricted property at the time of the transfer equals $40,000, determined without regard to any lapse restriction (as defined in Treas. Reg. §1.83-3(i)):

 

6.	Amount paid for the restricted property:  $0.00.

 

7.	A copy of this statement is being furnished to YTB International, Inc.