Exhibit 10.3

 

RESTRICTED STOCK AWARD AGREEMENT

UNDER THE

ISCO INTERNATIONAL, INC. 2003 EQUITY INCENTIVE PLAN

 

THIS RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”) is made as of the 12th
of January 2006 (the “Date of Grant”), between ISCO INTERNATIONAL, INC. (the
“Company”) and AMR ABDELMONEM (the “Grantee”).

 

WHEREAS, the Company maintains the ISCO International, Inc. 2003 Equity
Incentive Plan (the “Plan”) for the benefit of the key employees, directors and
consultants of the Company and its Affiliates; and

 

WHEREAS, the Grantee is an employee of the Company and is a party to the
“Employment Agreement” with the Company dated January 1, 2006 (the “Employment
Agreement”); and

 

WHEREAS, the Plan permits the grant of Shares, subject to certain restrictions;
and

 

WHEREAS, in order to align the Grantee’s personal financial interests with those
of the Company’s stockholders, the Company desires to grant to the Grantee a
number of shares of Common Stock, subject to the restrictions and on the terms
and conditions contained in the Plan and this Agreement.

 

NOW, THEREFORE, in consideration of these premises and the agreements set forth
herein, the parties, intending to be legally bound hereby, agree as follows:

 

SECTION 1. Award of Stock. Subject to the terms and conditions set forth in this
Agreement and the Plan, the Company hereby grants 3,500,000 (three million five
hundred thousand) Shares (the “Restricted Shares”) to the Grantee. The terms of
the Plan are hereby incorporated into this Agreement by this reference, as
though fully set forth herein. Capitalized terms used but not defined herein
will have the same meaning as defined in the Plan.

 

SECTION 2. Vesting of Restricted Shares. The Restricted Shares are subject to
forfeiture to the Company until they become vested in accordance with this
Section 2, as follows:

 

a. Time Vested Shares.

 

(i) 375,000 Restricted Shares will vest on June 30, 2006, if the Grantee remains
continuously employed by the Company through that date.

 

(ii) an additional 375,000 Restricted Shares will vest on December 31, 2006, if
the Grantee remains continuously employed by the Company through that date;

 

(iii) an additional 375,000 Restricted Shares will vest on June 30, 2007, if the
Grantee remains continuously employed by the Company through that date; and

 

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(iv) an additional 375,000 Restricted Shares will vest on December 31, 2007, if
the Grantee remains continuously employed by the Company through that date.

 

b. Performance Vested Shares.

 

(i) 1,000,000 Restricted Shares will vest on the filing date of the Company’s
Form 10-K for the 2006 fiscal year, if the Grantee remains continuously employed
by the Company through that filing date and the performance goals specified by
the Company with respect to that fiscal year have been achieved; and

 

(ii) an additional 1,000,000 Restricted Shares will vest on the filing date of
the Company’s Form 10-K for the 2007 fiscal year, if the Grantee remains
continuously employed by the Company through that filing date and the
performance goals specified by the Company with respect to that fiscal year have
been achieved.

 

(iii) The performance goals relevant under this Section 2(b) (which may include
intermediate goals, the achievement of which will result in partial vesting)
will be determined by the Company, based on the Company’s operating plan for the
applicable year, and will be communicated to the Grantee not later than 90 days
following the start of the applicable year. The Company will determine in good
faith whether the goals for any year have been achieved. In addition, the
Company may in good faith make adjustments to such goals so that departures from
the Company’s operating plan, changes in accounting principles, acquisitions,
dispositions, mergers, consolidations and other transactions, events or factors
influencing the achievement or measurement of such goals do not affect the
operation of this section in a manner inconsistent with its intended purpose of
encouraging growth in the Company’s equity value.

 

c. Effect of Termination. Upon termination of the Grantee’s service to the
Company for any reason or for no reason (and whether such termination is by the
Company, the Grantee or otherwise), (i) any Restricted Shares which have not
prior to the effective date of such termination become vested pursuant to this
Section 2 will immediately and automatically, without any action on the part of
the Company, be forfeited by the Grantee to the Company, and (ii) the Grantee
will have no further rights with respect to those Shares. Notwithstanding the
foregoing, if prior to December 31, 2007 the Grantee is involuntarily terminated
by the Company without “Cause” (as defined in Section 10.2 of the Employment
Agreement), 375,000 of the Restricted Shares otherwise subject to vesting under
Section 2(b) will become vested as of the date of such termination.

 

d. Failure to Achieve Performance Goals. With respect to Restricted Shares
subject to vesting based on the achievement of a performance goals under
Section 2(b), if the performance goals for a given year are not achieved, then
on the date of the filing of the Company’s Form 10-K for that year (or, if
earlier, upon a conclusive determination by the Company that such goals were not
achieved): (i) the Restricted Shares otherwise subject to vesting upon
achievement of those performance goals will immediately and automatically,
without any action on the part of the Company, be forfeited by the Grantee to
the Company, and (ii) the Grantee will have no further rights with respect to
those Shares.

 

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e. Effect of Change in Control. If there occurs a Change in Control prior to
December 31, 2007 and the Grantee remains in continuous service to the Company
through the date of that Change in Control, then immediately prior to (but
contingent upon) the occurrence of that Change in Control:

 

(i) any otherwise unvested Restricted Shares subject to vesting under
Section 2(a) will become vested; and

 

(ii) Restricted Shares otherwise subject to vesting under Section 2(b) based on
performance in the fiscal year of the Change in Control will vest to the extent
that performance for the portion of that year that transpires prior to the
Change in Control meets or exceeds a pro-rata portion of the performance goals
specified by the Board for that year under Section 2(b).

 

SECTION 3. Share Legends. The certificates evidencing all the Restricted Shares
shall bear such legend(s) as may be required by the Plan or applicable law.

 

SECTION 4. Escrow of Restricted Shares.

 

a. Certificates Held in Escrow. Certificates evidencing the Restricted Shares
issued under this Agreement will be held in escrow by the Secretary of the
Company or his or her designee (the “Escrow Holder”) until such shares become
vested in accordance with Section 2, at which time, the Escrow Holder will
deliver such certificates representing the Restricted Shares to the Grantee;
provided, however, that no certificates for Restricted Shares will be delivered
to the Grantee until appropriate arrangements have been made with the Company
for the withholding or payment of any taxes that may be due with respect to such
shares.

 

b. Forfeited Shares to be Returned. If the Restricted Shares are forfeited by
the Grantee under Section 2 or 9(g), the Escrow Holder will deliver the stock
certificate(s) evidencing those shares to the Company, which will then have the
right to retain and transfer those shares to its own name free and clear of any
rights of the Grantee under this Agreement or otherwise.

 

c. Instructions to Escrow Holder. The Escrow Holder is hereby directed to permit
transfer of the Restricted Shares only in accordance with this Agreement or in
accordance with instructions which are consistent with this Agreement which are
signed by both parties. In the event further instructions are reasonably desired
by the Escrow Holder, he or she shall be entitled to conclusively rely upon
directions executed by a majority of the members of the Board. The Escrow Holder
shall have no liability for any act or omissions hereunder while acting in good
faith in the exercise of his or her own judgment.

 

SECTION 5. Rights of Grantee. The Grantee shall have the right to vote the
Shares and to receive cash dividends with respect to the Restricted Shares;
provided however, that any cash dividends paid on the Restricted Shares while
those shares remain forfeitable will be reinvested in additional restricted
Shares. Such additional restricted Shares will be subject to the same vesting
conditions as were applicable to the Restricted Shares giving rise to such
dividends, deposited with the Escrow Holder and included thereafter as
Restricted Shares for purposes of this Agreement.

 

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SECTION 6. Stock Splits, etc. If, while any of the Restricted Shares remain
subject to forfeiture, there occurs any merger, consolidation, reorganization,
recapitalization, stock split, stock dividend, or other similar change in the
Company’s common stock, then any and all new, substituted or additional
securities or other consideration to which the Grantee is entitled by reason of
the Grantee’s ownership of the Restricted Shares will be immediately subject to
escrow, deposited with the Escrow Holder and included thereafter as “Restricted
Shares” for purposes of this Agreement.

 

SECTION 7. Tax Consequences. The Grantee understands and agrees that the Company
has not advised the Grantee regarding the Grantee’s income tax liability in
connection with the vesting of the Restricted Shares. The Grantee has reviewed
with the Grantee’s own tax advisors the federal, state, local and foreign tax
consequences of this investment and the transactions contemplated by this
Agreement. The Grantee is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents. The Grantee
understands that the Grantee (and not the Company) shall be responsible for the
Grantee’s own tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement and that he may pursuant to
Section 9(g) be required to pay cash to the Company at the time tax withholding
obligations arise with respect to the Restricted Shares. The Grantee understands
that Section 83 of the Code taxes as ordinary income the difference between
(i) the amount (if any) paid for the Restricted Shares, and (ii) the fair market
value of the Restricted Shares on the date any restrictions on the Restricted
Shares lapse. The Grantee understands that the Grantee may elect to be taxed at
the time the Restricted Shares are granted rather than when the applicable
restrictions lapse by filing an election under Section 83(b) of the Code with
the I.R.S. within 30 days from the date of grant. The Grantee acknowledges that
it is the Grantee’s sole responsibility and not the Company’s to file timely any
83(b) election.

 

SECTION 8. Restrictions on Transfer. Except for the escrow described in
Section 4 or the forfeiture of the Restricted Shares to the Company as described
in Section 2, none of the Restricted Shares or any beneficial interest therein
shall be transferred, encumbered, pledged or otherwise alienated or disposed of
in any way until the Restricted Shares become vested.

 

SECTION 9. General Provisions.

 

a. Entire Agreement. This Agreement, together with the Plan, represents the
entire agreement between the parties with respect to the grant of the Shares and
may only be modified or amended in a writing signed by both parties.

 

b. Notice. Any notice to be given to the Company will be addressed to the
Company in care of its Secretary (or such other person as the Company may
designate from time to time) at its principal executive office, and any notice
to be given to the Grantee will be delivered personally or addressed to him or
her at the address given beneath his or her signature, below, or at such other
address as the Grantee may hereafter designate in writing to the

 

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Company. Any such notice will be deemed duly given on the date and at the time
delivered via personal, courier or recognized overnight delivery service or, if
sent via telecopier, on the date and at the time telecopied with confirmation of
delivery or, if mailed, on the date five (5) days after the date of the mailing
(which will be by regular, registered or certified mail). Delivery of a notice
by telecopy (with confirmation) will be permitted and will be considered
delivery of a notice notwithstanding that it is not an original that is
received. Any notice to the Escrow Holder shall be sent to the Company’s
address, with a copy to the other party not sending the notice.

 

c. No Implied Waiver. Either party’s failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions, nor prevent that party thereafter from
enforcing each and every other provision of this Agreement.

 

d. No Right to Continued Employment. The grant of Shares hereunder will not
confer upon the Grantee any right to continue in the employ of the Company or
any of its subsidiaries or affiliates.

 

e. Amendment. The Committee may from time to time impose any conditions on the
Restricted Shares as it deems necessary or advisable to ensure that the Plan and
this award satisfy the requirements of all applicable laws (including without
limitation, the conditions of Rule 16b-3), and that Restricted Shares are issued
and resold in compliance with the Securities Act of 1933, as amended.

 

f. Governing Law. This Agreement shall be governed by, and enforced in
accordance with, the laws of the State of Delaware without regard to the
application of the principals of conflicts or choice of laws.

 

g. Tax Withholding. Notwithstanding any other provision of this Agreement, if
the Grantee does not at least three (3) days prior to the date that any
Restricted Shares would otherwise vest (or, if the Grantee makes an election
under Section 83(b) of the Code with respect to Restricted Shares, at least
three days prior to the date of such election) deliver to the Company a cash
amount reasonably estimated to be sufficient to satisfy any required tax
withholding obligations with respect to the vesting of such Shares (or the
Section 83(b) election), then the Restricted Shares that would otherwise vest
(or be subject to that Section 83(b) election) will instead then be forfeited
automatically and the Grantee will have no further right to those Shares.

 

h. Counterparts and Facsimiles. This Agreement may be executed, including
execution by facsimile signature, in one or more counterparts, each of which
shall be deemed an original, and all of which together shall be deemed to be one
and the same instrument.

 

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IN WITNESS WHEREOF, this Agreement has been executed by the parties on the 12th
day of January 2006.

 

ISCO INTERNATIONAL, INC. By:   /s/    STUART C. VAN WAGENEN        

Title: 

  Chairman GRANTEE     /s/    AMR ABDELMONEM            

[Amr Abdelmonem]

 

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