Document:

exv10w1

 

EXHIBIT 10.1

LICENSE AGREEMENT (Draft No. 6)

DATED effective the 1st day of August, 2003

BETWEEN:

	 
	West Peak Ventures of Canada Ltd.,
	A Federally incorporated Company under the laws of Canada,
	having an address for delivery at
	Suite 420-475 Howe Street, Vancouver BC V6C 2B3
	                (“West Peak”)

AND

	 
	Earth Energy Resources Inc.
	a corporation incorporated under the laws of the Province of
	Alberta, and having an address for delivery at
	# 2, 4716-91 Ave., Edmonton, Alberta, T6B-2L1
	                (“Earth”)

WHEREAS:

	1.	 	Earth is the 100% owner and exclusive holder of a chemical formulation
utilized for applications such as, but not limited to, extraction of oil
from surface mines tar sands and oil shale, soil reclamation and other
applications (the “process”);
	 
	2.	 	Earth wishes to engage the assistance and financial contribution of West
Peak to demonstrate the viability and effectiveness of the process and
implementation of commercial application(s);
	 
	3.	 	West Peak wishes to acquire from Earth an exclusive license of that part
of the process involving the extraction of oil from surface mines tar
sands and oil shale as well as that part of the process involving soil
reclamation, said license to be for all of Canada (the “License”).

THEREFORE West Peak and Earth, for consideration the sufficiency of which is
hereby acknowledge, enter this agreement on the following terms and conditions:

Article I

Interpretation

	 	 	 
	1.1	 	
Included Words. This Agreement shall read with such changes in gender or
number as the context shall require.
	 	 	 
	1.2	 	
Headings. The headings to the articles, sections, subsections,
paragraphs, parts or clauses of this Agreement are inserted for
convenience only and shall not affect the construction hereof;
	 	 	 
	1.3	 	
References. Unless otherwise stated, a reference herein to a numbered or
lettered article, section, subsection, paragraph, clause or schedule
refers to the article, section, subsection, paragraph, clause or schedule
bearing that number or letter in this Agreement. A

 

 

	 	 	 
	 	 	
reference to “this”
article, section, subsection, paragraph, clause or schedule means the
article, section, subsection, paragraph, clause or schedule in which the
reference appears. A reference to “this Agreement,” “hereof,”
“hereunder,” “herein,” or words of similar meaning, means this agreement,
including the schedule hereto, together with any amendments thereof.

Article II

License, Acquisition Cost and Royalty

	 	 	 
	2.1	 	
License. The unrestricted exclusive License granted by Earth to West
Peak is granted for all of Canada (the “license”).
	 	 	 
	2.2	 	
Additional Licenses. West Peak may, within three (3) years from the
execution of this within agreement and upon payment to Earth, in the sum
of $500,000.00 (U.S. currency), exercise an option to acquire an exclusive
license for the process for all countries located within Central and South
America. The terms and conditions of the license will be the same as the
terms and conditions in relation to the license granted by Earth to West
Peak for all of Canada, unless amended by mutual agreement of the parties.
	 	 	 
	2.3	 	
License Fee. In consideration for the granting, by Earth, of the
exclusive License to West Peak, West Peak shall pay to Earth a total of
$500,000.00 CDN. As follows:

	 	(a)	 	$ 40,000.00 CDN. within 30 days of the date of execution of
this agreement;
	 
	 	(b)	 	$ 60,000.00 CDN. within 45 days of the date of execution of
this agreement;
	 
	 	(c)	 	Subject to Section 3.5, $100,000.00 CDN. within 90 days
following receipt by West Peak of the engineering report referred to
in Section 3.3 herein; and,
	 
	 	(d)	 	$300,000.00 CDN. within 12 months following the testing
described in Section 3.3 herein, provided that West Peak has not
terminated this agreement pursuant to Section 3.5.

	 	 	 
	2.4	 	
Royalty. West Peak shall calculate and pay to Earth, on a quarterly
basis, a Royalty amounting to 5% of West Peak’s Gross Revenues related to
and resulting from the process. The first Royalty payment shall be due 3
months from the date Earth delivers to West Peak the plant facility
described in Section 2.5 herein. West Peak acknowledges that Earth is
entitled to review and/or audit the financial records of West Peak or the
records of any and all sub-licensee or assignee of West Peak, is so far as
those records relate to the calculation and/or payment of royalties to
Earth. If Earth chooses to review and/or audit the financial records of
West Peak or the records of any sub-licensee or assignee of West Peak, the
records will be made available to Earth during normal business hours and
Earth, in turn, will not during the course of the review and/or audit,
unduly interfere with the business of West Peak or the sub-licensee’s or
assignees of West Peak.
	 	 	 
	2.5	 	
Acquisition Costs. In addition to the License Fee set out in Section
2.3, West Peak will, provided that West Peak has not terminated this
agreement pursuant to Section 3.5, purchase from Earth, complete turn key
plants to be constructed by Earth. The price for
each plant facility shall be a sum of money equal to the actual dollar
cost of Earth to construct the said facility plus an additional sum equal
to 25 % of the actual dollar cost of Earth to construct the facility.
Upon payment by West Peak of the monies set out in Section 2.3(c), Earth
shall provide West Peak with an estimate of the total cost of the plant
facility. West Peak shall then immediately provide Earth with a
non-refundable

 

 

	 	 	 
	 	 	
deposit of a sum of money equal to 25 % of the total
estimated cost of construction of the facility. Upon receipt of the
deposit, Earth shall begin construction of the plant facility, said
construction to be completed no later than 4 months following receipt of
the deposit monies from West Peak. Upon completion of construction by
Earth, Earth shall advise West Peak of the balance of monies due for the
construction of the facility and make the facility available for
inspection by West Peak. Concurrently, Earth shall provide copies of all
invoices or other documentation evidencing the means by which Earth
calculated the cost of construction of the facility. West Peak retains
the right to audit from time to time to insure that any equipment and or
chemical products purchased are on a cost plus 25% profit basis. West
Peak shall immediately make arrangements to inspect the facility and make
payment of the balance of funds due to Earth for the construction of the
facility. Earth is not obligated to deliver up the plant facility to West
Peak until the balance of monies due are in fact paid by West Peak.
	 	 	 
	2.6	 	
Product Cost. As West Peak will not be provided with the chemical
composition of the formula or formulas used in the process, Earth agrees
to supply, as required by West Peak, such quantities of chemical products
needed in the process, at a price equal to the cost of Earth to produce
such products plus an additional 25%.
	 	 	 
	2.7	 	
Term. This agreement shall enure for a period of 10 (ten) years and,
provided that West Peak has fulfilled all of its obligations, pursuant to
this within agreement, the license may be renewed for a further ten (10)
year period on the same terms and conditions as contained in this within
agreement, and shall be renewed on the same terms and conditions for each
subsequent ten year period.
	 	 	 
	2.8	 	
Processed Sand or Soil. The parties further acknowledge and agree
that if, during the currency of this agreement, West Peak or Earth on
behalf of West Peak, is able to sell to a third party, any of the
processed sand or soil resulting from the use of the process, each of the
parties herein shall be responsible to pay 1⁄2 of the cost of
transportation of that sand or soil to the third party and, further, that
after deduction of transportation costs, the proceeds of the sale shall be
divided equally as between the parties.
	 	 	 
	2.9	 	
Assignment or Sublicense. West Peak may assign or grant a sublicense
of the license granted by this within agreement but only with the prior
written consent of Earth, the consent to be reasonably exercised and
provided that the assignee or sub licensee shall be bound by the terms of
this agreement. It is further understood and agreed that an assignment or
sublicense shall not relieve West Peak from any obligation pursuant to
this agreement.
	 	 	 
	2.10	 	
Sale of License. If West Peak, during the currency of this agreement,
wishes to sell all of its interest in the license granted by this within
agreement, the sale may occur with the prior written consent of Earth, the
consent to be which will not be unreasonably withheld provided that the
purchaser will be bound by the terms of this agreement. Any
consideration received by West Peak, for the sale of the license, in
excess of $500,000.00 (Canadian currency) or a sum in excess of
$500,000.00 (U.S. currency) for the sale of a Central or South American
license, if the option to purchase the said Central and South American
license is exercised by West Peak, shall be divided as to a two-third
(2/3) share to West Peak and a one-third (1/3) share to Earth.
	 	 	 
	2.11	 	
Product and Facility Use. It is expressly understood by West Peak that,
during the currency of this agreement, product or formulation, provided by
Earth to West Peak, shall

 

 

	 	 	 
	 	 	
only be used in plant facilities constructed and
sold by Earth to West Peak; that the plant facility or facilities sold to
West Peak by Earth shall only be used for the extraction of oil from
surface mines tar sands or oil shale or in soil reclamation projects,
within Canada; that the plant facility or facilities constructed and sold
by Earth to West Peak cannot be used to test the efficacy of any other
chemical formulation; nor can a formulation or formulations be used in the
facility or facilities, other than the Kalmic 450 formulation or any other
applicable Kalmic formula; that West Peak will not test or allow to be
tested, the formulation or product provided by Earth to West Peak, nor
will West Peak modify or attempt to modify or to allow any party modify or
attempt to modify any formulation or product provided by Earth to West
Peak. Any breach of any obligation, pursuant to this within Section 2.11,
shall be cause for immediate termination of any license agreement as
between Earth and West Peak.

Article III

Due Diligence and Testing

	 	 	 
	3.1	 	
Non-Disclosure. Concurrent with the execution of this within agreement
West Peak, by its authorized officers, shall execute a Confidentiality
Agreement, in a form to be agreed to by the parties herein. Earth shall
retain the right to demand the signing of the Confidentiality Agreement by
any employee, agent or officer of West Peak or any employee, officer or
agent of any licensee or assignee of West Peak, that Earth, in it’s sole
discretion, deems advisable. West Peak and any licensee or assignee of
West Peak, does hereby agree to keep all data, documents, information, and
records strictly confidential and shall not sell, nor disclose, any of the
data, documents, information and records received from Earth or West Peak
related to the business activities of Earth to any other party (nor permit
copying) without first obtaining written consent of Earth.
	 	 	 
	3.2	 	
Due Diligences. Immediately upon execution of this agreement, West
Peak’s representative(s) shall be entitled and shall receive full
unrestricted access to conduct a comprehensive and thorough inspection and
verification of all the details of the process, including inspection of
any test facility, subject to a proviso that, at no time, will West Peak
or any sub-licensee or assignee of West Peak be entitled to receive any
information as to the chemical composition of the formula or formulas used
in the process.
	 	 	 
	3.3	 	
Testing. Within 14 days following West Peak’s payment of monies due
pursuant to Section 2.3(b), in the amount of $60,000.00 CDN., a
large-scale 500 ton test of suitable bitumen material shall be conducted.
If the cost of a large scale test is greater than $60,000, Earth will
propose a budget and if funded by West Peak, any payments in excess of
$60,000 may be funded by West Peak and if so will be deemed a partial
license fee payment as
described in Section 2.3. The test shall be within the Province of
Alberta at a location approved by West Peak. At West Peak’s cost, it
shall provide the test material to be approved by Earth. Earth, at its
cost, shall provide a suitable test plant capable of 500 tons per day
throughput, related equipment, materials and supplies, permits and
licensing, all necessary technical support, including the services of an
independent professional and appropriately qualified Laboratory, the
latter of which is to be approved by West Peak. The Laboratory shall
provide, as soon as practicable after completion of the testing, an
engineering report, prepared to normal industry standards, summarizing
the test results. Any oil recovered as a result of the test shall be the
property of West Peak.
	 	 	 
	3.4	 	
Additional Testing. West Peak may, at any time after execution of
this agreement, at the

 

 

	 	 	 
	 	 	
sole cost of West Peak, have West Peak
representatives travel to Grande Prairie with a bitumen or heavy oil
sample of approx ten tons, in order to test the process using Earth’s
small test facility. Earth shall make the facility available and each
party is entitled to have representatives present at all times during
testing. West Peak will be entitled to retrieve the oil resulting from the
use of the process and have the said oil tested at a laboratory of West
Peak’s choosing. West Peak agrees to provide a copy, to Earth, of any
laboratory report or letter or test results provided by the laboratory in
relation to the said testing.
	 	 	 
	3.5	 	
Test Results. West Peak may terminate this Agreement if West Peak is
not satisfied with the test results provided as a result of the testing
completed pursuant to Section 3.3. West Peak must exercise this right to
terminate, given pursuant to this within Section, within 90 days following
the receipt by West Peak of the engineering report described in Section
3.3 herein. It is understood and agreed that if West Peak terminates this
Agreement, pursuant to this within Section, all monies paid by West Peak
prior to termination of this Agreement, remain the property of Earth
without any claim or further claim by West Peak. It is further understood
and agreed that West Peak will return to Earth all data, information or
records related to the process or to the business activities of Earth and
that the provisions of the Confidentiality Agreement will remain in full
force and effect, notwithstanding the termination of this Agreement. West
Peak will also discharge, at it’s own expense, any claimed security
interest in the license, filed pursuant to the Personal Property Security
Act, RSA 2000, c. P-7 and provide proof of discharge to Earth.
	 	 	 
	3.7	 	
Director Appointment. Upon West Peak’s payment of monies due pursuant to
Section 2.3 and 2.5, the Director’s of Earth shall appoint an additional
director of Earth. The additional director shall be a person chosen by
West Peak. At the same time, the directors of West Peak shall appoint an
additional director of West Peak. The additional director of West Peak
shall be a person chosen by Earth. It is understood and agreed that during
the currency of this agreement, each party is entitled to have a single
director, of that party’s choice, to be on the Board of Directors of the
other party. The obligation for a director appointment is mutual and if
one party is unable or unwilling to appoint a director, pursuant to this
within Section, the other party is not obligated to make any appointment.

Article IV

Misc. Covenants

	 	 	 
	4.1	 	
Use of Proceeds. For an initial $40,000.00, paid pursuant to Section
2.3(a), Earth undertakes to forthwith file a patent application for the
process. From the monies paid,
pursuant to Section 2.3(b), Earth agrees to complete its corporate
organization, ensure that the small test plant facility is fully
operational and available for testing and make available to West Peak its
test plan(s), including the process, personnel and materials, subject to
a proviso that Earth is not obligated to provide West Peak, or any
assignee or licensee of West Peak, with a chemical composition of the
formula or formulas used in the process.
	 	 	 
	4.2	 	
No Liens - No Encumbrances Earth represents and warrants that the
process, equipment and related technologies and materials, patents or
other intellectual property are completely clear of liens or encumbrances
and undertakes to hold West Peak harmless from any and all claims prior to
this agreement that might affect rights under this Agreement. West Peak
reserves the right to file, at it’s sole cost and expense, once this
license agreement is signed, a claim to a security interest, pursuant to
the Personal Property Security Act, RSA 2000, c. P-7.

 

 

	 	 	 
	4.3	 	
Regulations Earth represents and warrants that in conjunction with the
process, it is in full compliance with all Federal and Provincial
Regulations in Canada.
	 	 	 
	4.4	 	
Data The parties recognize that Earth has accumulated and compiled,
without limitation, documentation and other data in connection with the
process including equipment, supplies and other materials (the “data”).
Contemporaneous with the filing of Earth’s patent pending Earth shall
forthwith make available to West Peak or its representative all data,
without limitation or restriction, for inspection and copying, subject to
a proviso that West Peak or any assignee or sub-licensee of West Peak, is
not entitled to know the chemical composition of the formula or formulas
used in the process.

	 	 	 
	4.4.1	 	
Prior Data Data prior to the date of this agreement is and shall
continue to be owned by Earth, however, the said data shall be made
available for inspection and copying by West Peak, subject to a proviso
that West Peak or any assignee or licensee of West Peak, is not entitled
to know the chemical composition of the formula or formulas used in the
process.
	 	 	 
	4.4.2	 	
New Data Data created subsequent to the signing of this agreement, in
relation to the efficacy of the process, or of the efficacy of the formula
or formulas used in the process or the chemical composition of the formula
or formulas used in the process shall remain the sole property of Earth.
	 	 	 
	4.5	 	
Default Payment If West Peak is unable to or elects not to make any
payment owed to Earth, on 30 days written notice of said default by Earth
to West Peak, then at Earth’s election, West Peak shall be subject to
binding arbitration (pursuant to section 6.7). If West Peak if deemed to
pay as a result of the binding arbitration and fails to do so within 30
days, Earth at its soul description may cancel the license.
	 	 	 
	4.6	 	
Hold Harmless Earth does hereby unconditionally guarantee and agree to
remain liable for any and all obligations and undertakings of Earth
hereunder and to hold West Peak harmless against any and all claims
arising prior to the date of this agreement.
	 	 	 
	4.7	 	
Currency All dollar amounts are in Canadian currency unless otherwise
stated.
	 	 	 
	4.8	 	
Sale of Common Shares of Earth. Within sixty (60) days following the
receipt by West Peak of the test results, more particularly described in
Section 3.3 herein, West Peak may, upon paying to Earth the sum of
$500,000.00 (U.S. currency) exercise an option to purchase 25% of the
authorized Class “A” Common Shares of Earth.
	 	 	 
	4.9	 	
Additional Terms Each of West Peak and Earth acknowledge that additional
terms to this agreement may be essential to the operation of the License.
Both parties agree to execute a formal license agreement by September 31,
2003 A.D. In the event West Peak and Earth are unable to agree on any
additional term(s), the disputed term(s) shall be resolved by arbitration
contemplated by Section 6.7.

ARTICLE V

	 	 	 
	5.1	 	
Notice Any notice or other writing required or permitted to be given
hereunder or for the purposes hereof shall be sufficiently given if
delivered or telecopied to the party to whom

 

 

	 	 	 
	 	 	
it is given at:

	 	 	If to West Peak:
	 
	 	 	West Peak Ventures of Canada Ltd.
	 	 	Box 685, 440 - 10816 Macleod Trail S.
	 	 	Calgary, Alberta T2J 5N8
	 	 	Attention: Doug W. Cannaday, President
	 	 	Telecopier No. (403) 201-8971
	 
	 	 	If to Earth:
	 
	 	 	Earth Energy Resources Inc.
	 	 	

	 	 	Bezanson, Alberta      
	 	 	Attention: Laurie Lindgren, President
	 	 	Telecopier No. (780) 539-1647
	 
	 	 	Any notice given as aforesaid shall be deemed to have been given or made
on, if delivered, the date on which it was delivered or, if telecopied,
on the next business day after it was telecopied. Any Party may change
its address for notice from time to time by notice given to the other
Parties in accordance with the foregoing.

ARTICLE VI

GENERAL PROVISIONS

	 	 	 
	6.1	 	
Entire Agreement This Agreement, constitutes the entire agreement between
the Parties and replaces and supersedes all prior agreements, memoranda,
correspondence, communications, negotiations and representations, whether
oral or written, express or
implied, statutory or otherwise between the Parties with respect to the
subject matter herein. This Agreement may not be amended or modified
except by an instrument in writing signed by each of the Parties.
	 	 	 
	6.2	 	
Waiver No consent or waiver, express or implied, by any Part to or of any
breach or default by any other Party or any or all of its obligations
under this Agreement will:

	 	1)	 	be valid unless it is in writing and stated to be a consent
and waiver hereunder;
	 
	 	2)	 	be relied upon as a consent or waiver to or of any other
breach or default of the same or any other obligation;
	 
	 	3)	 	constitute a general waiver under this Agreement; or
	 
	 	4)	 	eliminate or modify the need for a specific consent or waiver
in any other or subsequent instance.

	 	 	 
	6.3	 	
Further Assurances The Parties will execute such further and other
documents and do such further and other things as may be necessary or
convenient to carry out and give effect to the intent of this Agreement.

 

 

	 	 	 
	6.4	 	
Time is of the Essence Time shall be of the essence in the performance of
this Agreement.
	 	 	 
	6.5	 	
Enurement This Agreement shall enure to the benefit of and be binding
upon the Parties and their respective successors and assigns.
	 	 	 
	6.6	 	
Governing Law This Agreement shall be governed by and construed in
accordance with the laws of the Province of Alberta and the laws of Canada
applicable therein.
	 	 	 
	6.7	 	
Arbitration Subject to Section 4.6 herein, in the event of any dispute
affecting matters in any way connected with or affected by this agreement
by and/or on behalf of either of the Parties, the Parties agree such
dispute shall be resolved by arbitration pursuant to the Arbitration Act,
RSA 2000, c. A-43 conducted in the City of Calgary, Province of Alberta.
The cost of such arbitration shall be shared equally by West Peak as to
one-half and the remainder one-half by Earth. An arbitration proceeding
shall determine, with finality, any dispute. In the event Earth fails or
is unable to pay its share of any costs under this
	 	 	 
	 	 	
clause, West Peak is hereby authorized by Earth to deduct Earth’s share
of costs from any future payment owed by West Peak to Earth.
	 	 	 
	6.8	 	
Fax and Counterpart This Agreement may be executed by fax and in
counterparts.

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
day and year first above written.

	 	 	 	 	 
	 	 	
West Peak Ventures of Canada Ltd.
	 	 	
Per:	/s/
	 	 	 	 	

	 
	 	 	
Earth Energy Resources Inc.
	 	 	
Per:	/s/ DAVID BROUGH
	 	 	 	 	

	 	 	 	 	        David Brough
	 
	 	 	
Per:	/s/ LAURIE LINGEREN
	 	 	 	 	

	 	 	 	 	        Laurie Lindgren<PAGE>

                                                                    EXHIBIT 10.1

                                 CHRONIMED INC.
                  RESTRICTED STOCK AWARD AGREEMENT FOR OFFICERS
                       UNDER THE 2001 STOCK INCENTIVE PLAN

         This RESTRICTED STOCK AWARD AGREEMENT (this "AGREEMENT") is entered
into by and between CHRONIMED INC. (the "COMPANY") and _________________ (the
"RECIPIENT"), effective as of ________, 200__ (the "GRANT DATE").

         The Company hereby awards to the Recipient a Restricted Stock Award for
_________________ (________) shares of Common Stock (the "RESTRICTED STOCK")
under the Chronimed Inc. 2001 Stock Incentive Plan (the "PLAN"), under the
following terms and conditions.

1.       GOVERNING PLAN. This Agreement is governed by the Plan which is
         incorporated into this Agreement by reference. Capitalized terms used
         but not otherwise defined in this Agreement have the meanings set forth
         in the Plan. The Recipient agrees to be bound by the terms and
         conditions of the Plan, which control in case of any conflict with this
         Agreement, except as otherwise specifically provided for in the Plan.

2.       PURCHASE PRICE. The Recipient shall not be required to pay any
         consideration for the Restricted Stock.

3.       ISSUANCE OF RESTRICTED STOCK; VESTING; DIVIDEND AND VOTING RIGHTS. The
         shares of Restricted Stock awarded under this Agreement will be issued
         in the form of a Common Stock certificate upon the Grant Date (a
         "Restricted Share Certificate"). Upon vesting of shares represented by
         a Restricted Share Certificate, as described in Section 3.1, Recipient
         will surrender the affected Restricted Share Certificate and receive a
         certificate for the vested shares (a "Vested Share Certificate") and a
         replacement Restricted Share Certificate representing remaining
         unvested shares. A Vested Share Certificate and any Restricted Share
         Certificate shall be delivered to the Recipient as soon as
         administratively feasible, but in no event more than 15 days following
         the vesting date and Recipient's surrender of an affected Restricted
         Share Certificate.

         3.1      VESTING. The Recipient will vest in the right to receive
                  shares of Restricted Stock, free from the restrictions of this
                  Agreement, in accordance with the following vesting schedule,
                  unless vesting is accelerated as provided in Section 3.2:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
        VESTING DATE                    VESTED PORTION OF RESTRICTED STOCK AWARD
--------------------------------------------------------------------------------
<S>                                     <C>
First Anniversary of Grant Date                     _________ shares
--------------------------------------------------------------------------------
Second Anniversary of Grant Date                    _________ shares
--------------------------------------------------------------------------------
Third Anniversary of Grant Date                     _________ shares
--------------------------------------------------------------------------------
Fourth Anniversary of Grant Date                    _________ shares
--------------------------------------------------------------------------------
</TABLE>

         3.2      ACCELERATION. The Fair Market Value of the Common Stock as of
                  the Grant Date was $______ per share. If for a period of five
                  consecutive trading days occurring at any time after the Grant
                  Date, the Fair Market Value of Common Stock has been equal to
                  or greater than $______ (a price which is 60 percent greater
                  than the Fair Market Value of the Common Stock on the Grant
                  Date) then, on the first date that this requirement is
                  satisfied, if the Recipient is then an employee of the
                  Company, this Restricted Stock Award and all portions of the
                  Restricted Stock Award that

                                      E-1

<PAGE>

                  remain outstanding will become fully vested (if not already
                  vested) free of the restrictions of this Agreement.
                  Notwithstanding the foregoing, this Restricted Stock Award and
                  all portions of the Restricted Stock Award that remain
                  outstanding will become fully vested (if not already vested)
                  free of the restrictions of this Agreement upon the occurrence
                  of an Event.

         3.3      DIVIDEND RIGHTS. At such time as a Vested Share Certificate is
                  delivered to the Recipient for vested shares of Restricted
                  Stock, the Company shall also deliver to the Recipient an
                  amount equal to the aggregate dividends that have been paid on
                  the shares represented by the Vested Share Certificate, with
                  respect to the record dates occurring on or after the Grant
                  Date, less any required withholding taxes. No interest shall
                  be owed on the dollar amount so paid. In no event will any
                  accumulated dividend amount distributed with respect to
                  forfeited shares of Restricted Stock.

         3.4      VOTING RIGHTS. The Recipient shall be entitled to cast votes
                  with respect to shares of Restricted Stock that have not been
                  forfeited without regard as to whether or not such shares of
                  Restricted Stock have vested.

4.       TRANSFERABILITY; RESTRICTIVE LEGEND. Except as provided in or pursuant
         to Section 8.12 of the Plan, unvested shares of Restricted Stock are
         not transferable except by will or the laws of descent and distribution
         or as otherwise permitted by the Administrator in its sole discretion.
         Vested shares of Restricted Stock are freely transferable.
         Notwithstanding the foregoing, unless otherwise permitted under Section
         8 of this Agreement, vested shares of Restricted Stock issued to a
         person subject to Section 16 of the Securities Exchange Act of 1934
         shall not be sold, assigned or otherwise transferred until at least six
         months and one day have elapsed from the date on which the shares of
         Restricted Stock vested. Restricted Share Certificates shall bear an
         appropriate legend referring to the vesting, forfeiture and
         transferability restrictions imposed on shares of Restricted Stock
         pursuant to this Agreement.

5.       TERMINATION OF EMPLOYMENT. Except as otherwise agreed to by the
         Administrator and the Recipient in writing, in the event that the
         Recipient's employment with the Company is terminated for any reason,
         the Restricted Stock Award will terminate immediately and all portions
         of the Restricted Stock Award then outstanding will terminate
         immediately and be forfeited. For purposes of this Section 5, the
         Recipient's employment does not terminate if the Recipient goes on a
         military leave, a sick leave or another bona fide leave of absence, if
         the leave was approved by the Company in writing. The Recipient's
         employment terminates when the approved leave ends, unless the
         Recipient immediately returns to active work.

6.       NO GUARANTY OF EMPLOYMENT. This Agreement will in no way restrict the
         right of the Company to terminate the Recipient's employment at any
         time.

7.       INVESTMENT REPRESENTATION; REGISTRATION LEGEND. Unless a registration
         statement is in effect with respect to the shares of Restricted Stock
         issued to the Recipient at the time of any vesting of the Restricted
         Stock Award, the Recipient represents and agrees that all shares of
         Restricted stock acquired by the Recipient under this Agreement will be
         purchased for investment purposes only and not with a view to
         distribution or resale. If a registration statement is not in effect
         with respect to the shares of Restricted Stock issued to the Recipient
         at the time of any vesting of the Restricted Stock Award, the Company
         may require that an appropriate legend be inscribed on the face of any
         certificate issued under this Agreement, indicating that transfer of
         the shares is restricted for securities law purposes, and may place an
         appropriate stop transfer order with the Company's transfer agent with
         respect to such shares.

8.       WITHHOLDING; TAXABLE INCOME. In any case where withholding is required
         or advisable under federal, state or local law in connection with any
         vesting of Restricted Stock under this Agreement, the Company is
         authorized to withhold appropriate amounts from amounts otherwise
         payable to the Recipient, or may require the Recipient to remit to the
         Company an amount equal to such appropriate amounts. Notwithstanding
         the foregoing, the Recipient may elect, if permitted by the
         Administrator, to have the

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<PAGE>

         Company redeem a number of shares of Restricted Stock issued to the
         Recipient on a vesting date by such number of shares equal to the
         withholding taxes due at standard withholding rates. Where shares of
         Restricted Stock are used to pay all or part of the withholding taxes,
         the shares shall be valued at their Fair Market Value at the time of
         payment.

9.       MERGER; CONSOLIDATION OR OTHER EVENT. The terms of this Agreement are
         subject to modification upon the occurrence of certain events as
         described in Section 8.2 of the Plan.

10.      MARKET STAND-OFF. In connection with any underwritten public offering
         by the Company of its equity securities pursuant to an effective
         registration statement filed by the Securities Act, the Recipient shall
         not directly or indirectly sell, make any short sale of, loan,
         hypothecate, pledge, offer, grant or sell any option or other contract
         for the purchase of, any option or other contract for the sale of, or
         otherwise dispose of or transfer, or agree to engage in any of the
         foregoing transactions with respect to, any Restricted Stock acquired
         under this Agreement without the prior written consent of the Company
         or its underwriters. Such restriction will be in effect for such period
         of time following the date of the final prospectus for the offering as
         may be requested by the Company or such underwriters. In no event,
         however, shall such period exceed 180 days.

                                         CHRONIMED INC.

ACCEPTED:

                                         By ____________________________________

________________________________         Its ___________________________________
Recipient

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