EXECUTION COPY
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (the "Agreement") is entered into as of May
6, 1997, between BONE, MUSCLE AND JOINT, INC., a Delaware corporation (the
"Company"), and the individual identified on the signature page hereto (the
"Stockholder"), with reference to the following facts. Certain capitalized terms
used herein are defined in Section 6 below.
A. This Agreement is entered into in connection with and concurrently with
that certain Management Services Agreement dated as of the date hereof (the
"Management Services Agreement") between the Company and Lauderdale Orthopaedic
Surgeons (the "Medical Group").
B. This Agreement is being entered into concurrently with substantially
identical Restricted Stock Agreements between the Company and the other partners
in or employees of the Medical Group identified on Schedule A attached hereto
(such individuals and their Permitted Transferees are referred to herein
collectively as the "Stockholders").
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Purchase and Sale of Restricted Shares; Representations and Warranties
of Stockholder.
(a) Upon execution of this Agreement, the Company shall, pursuant to
Section 4 and Schedule III of the Management Services Agreement, issue to the
Stockholder that number of shares (such shares together with those shares
hereafter acquired pursuant to the terms hereof, are referred to herein as the
"Restricted Shares") of common stock, $.001 par value (the "Common Stock"), of
the Company set forth opposite the Stockholder's name on Schedule A attached
hereto. The aggregate shares of Common Stock issued to the Stockholders are
referred to collectively herein as "Restricted Stock." Simultaneously with the
execution and delivery hereof, the Company is delivering to the Stockholder the
certificate(s) representing the Restricted Shares against receipt by the Company
of the consideration therefor as set forth opposite the Stockholder's name on
Schedule A attached hereto.
(b) In connection with the issuance of the Restricted Shares hereunder, the
Stockholder represents and warrants to the Company that:
(i) the Restricted Shares to be issued to the Stockholder pursuant to
this Agreement shall be acquired for the Stockholder's own account, for
investment only and not with a view to, or intention of, distribution
thereof in
violation of the 1933 Act, or any applicable state securities laws, and the
Restricted Shares will not be disposed of in contravention of the 1933 Act
or any applicable state securities laws;
(ii) the Stockholder has generally such knowledge and experience in
business and financial matters and with respect to investments in
securities of privately held companies so as to enable the Stockholder to
understand and evaluate the risks and benefits of his or her investment in
the Restricted Shares;
(iii) the Stockholder has no need for liquidity in his or her
investment in the Restricted Shares and is able to bear the economic risk
of his or her investment in the Restricted Shares for an indefinite period
of time and understands that the Restricted Shares have not been registered
or qualified under the 1933 Act or any applicable state securities laws, by
reason of the issuance of the Restricted Shares in a transaction exempt
from the registration and qualification requirements of the 1933 Act or
such state securities laws and, therefore, cannot be sold unless
subsequently registered or qualified under the 1933 Act or such state
securities laws or an exemption from such registration or qualification is
available;
(iv) the Stockholder understands that the exemption from registration
afforded by Rule 144 (the provisions of which are known to the Stockholder)
promulgated under the 1933 Act, depends on satisfaction of various
conditions and that, if applicable, Rule 144 may only afford the basis for
sales under certain circumstances and only in limited amounts;
(v) the Stockholder is an individual (A) whose individual net worth,
or joint net worth with his or her spouse, presently exceeds $1,000,000 or
(B) who had an income in excess of $200,000 in each of the two most recent
years, or joint income with his or her spouse in excess of $300,000 in each
of those years (in each case including foreign income, tax exempt income
and the full amount of capital gains and losses but excluding any income of
other family members and any unrealized capital appreciation) and has a
reasonable expectation of reaching the same income level in the current
year; or the Stockholder otherwise meets the requirements to be considered
an accredited investor, as defined under the 1933 Act; and
(vi) the Stockholder has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of the
Restricted Shares and has had full access to or been provided with such
other
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information concerning the Company as he or she has requested.
(c) This Agreement constitutes the legal, valid and binding obligation of
the Stockholder, enforceable in accordance with its terms, and the execution,
delivery and performance of this Agreement by the Stockholder does not and will
not conflict with, violate or cause a breach of any agreement, contract or
instrument to which the Stockholder is a party or any judgment, order or decree
to which the Stockholder is subject.
(d) As an inducement to the Company to issue the Restricted Shares to the
Stockholder and as a condition thereto, the Stockholder acknowledges and agrees
that:
(i) neither the issuance of the Restricted Shares to the Stockholder
nor any provision contained herein shall affect the right of the Company to
terminate the Management Services Agreement in accordance with its terms;
and
(ii) the Company shall provide the Stockholder with substantially the
same information regarding the Company that the Company regularly discloses
to its other shareholders.
2. Vesting of the Restricted Shares.
(a) Except as otherwise provided in Section 2(b) below, the Restricted
Shares shall become vested in accordance with the following schedule, if, as of
each such date, (i) the Management Services Agreement has not been terminated,
(ii) there has not been a Cessation of Active Practice (as defined in Section
2(c) below) by the Stockholder, (iii) the Stockholder has not become permanently
disabled, and (iv) the Stockholder has not died:
Anniversary Date Cumulative Percentage of
of this Agreement Restricted Shares Vested
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First 25%
Second 50%
Third 75%
Fourth 100%
For purposes of this Agreement, "Anniversary Date of this Agreement" means April
1 of each year after 1997. Restricted Shares which have become vested are
referred to herein as "Vested Shares" and all other Restricted Shares are
referred to herein as "Unvested Shares."
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(b) Notwithstanding the foregoing, in the event of the death of the
Stockholder, in addition to any shares that have vested in accordance with
Section 2(a) above, the number of Unvested Shares, if any, that would have
become Vested Shares during the 18-month period immediately following the date
of death had such death not occurred shall be deemed Vested Shares as of the
date of death.
(c) For purposes of this Agreement, "Cessation of Active Practice" means a
physician Stockholder's failure (other than by reason of death), throughout any
twelve-month period ending on the day before any of the vesting dates described
in Section 2(a) hereof, to engage in the practice of medicine with the Medical
Group on a regular basis, including the performance of orthopedic surgical
procedures on a regular basis (except in the case of any Stockholder who did not
practice surgery on a regular basis immediately prior to the date hereof), such
that (i) the Stockholder was engaged in patient care activities for less than
seventy-five percent (75%) of the time that the Stockholder had been engaged in
such activities during the twelve-month period immediately preceding the date
hereof, and (ii) the Stockholder generated xxxxxxxx that were less than
seventy-five percent (75%) of the amount of xxxxxxxx generated by the
Stockholder during the twelve-month period immediately preceding the date
hereof.
3. Repurchase of Restricted Shares.
(a) In the event of the termination of the Management Services Agreement
pursuant to Section 13 thereof (the "Repurchase Event") on or before the fourth
anniversary of the date hereof, the Company shall have the right (but not the
obligation) (the "Repurchase Option"), to be exercised in its sole discretion,
to repurchase all or any portion of the Restricted Shares (whether vested or
unvested and whether held by the Stockholder or one or more of the Stockholder's
Permitted Transferees) pursuant to the terms and conditions set forth in this
Section 3.
(b) The Company may elect to repurchase all or any portion of the
Restricted Shares by delivering written notice (the "Repurchase Notice") to the
Stockholder within ninety (90) days after the Repurchase Event; provided,
however, that if the Company elects to repurchase less than all of the
Restricted Shares, the Company shall first repurchase Unvested Shares and then
repurchase that number of Vested Shares, if any, as the Company may, in its sole
discretion, elect. The Repurchase Notice shall set forth the number of Unvested
Shares and Vested Shares to be repurchased, the aggregate consideration to be
paid for such shares, and the time and place for the closing of the transaction.
The purchase price payable for each Unvested Share shall equal the Original
Value of such share and the purchase price payable for each Vested Share shall
equal the Fair Market
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Value of such share. If the Company decides to repurchase Restricted Shares from
any Stockholder pursuant to this Section 3(b), then the Company must purchase
that number of Restricted Shares which it has elected to repurchase from all of
the Stockholders pro rata according to the number of shares of Restricted Stock
held by all of the Stockholders at the time of delivery of such Repurchase
Notice (determined as nearly as practicable to the nearest whole share).
(c) The closing of the repurchase of Restricted Shares pursuant to the
Repurchase Option shall take place on the date designated by the Company in the
Repurchase Notice, which date shall not be more than sixty (60) days nor less
than five (5) days after the delivery of the Repurchase Notice. The Company
shall pay for the Restricted Shares to be purchased pursuant to the Repurchase
Option by delivery of a check or wire transfer of funds in the aggregate amount
of the repurchase price for such shares; provided, however, that in the event
the Medical Group is obligated to pay to the Company any sums in connection with
the repurchase of assets by the Medical Group pursuant to Section 13.5 or 14.1
of the Management Services Agreement, the total amount of such sums may be
offset by the Company against any amounts owed by the Company to the Stockholder
pursuant to this Agreement (if such Stockholder is, at such time, an equity
owner of or partner in the Medical Group), such offset amount to be allocated
pro rata among all of the Stockholders who at such time hold equity of or are
partners in the Medical Group. The Company's payment under this Section 3(c)
shall be subject to the terms and provisions of any financing agreement, if any,
to which the Company is a party, its certificate of incorporation and the
operation of law. The Company shall be entitled to require the signature of the
Stockholder to be guaranteed and to receive representations and warranties from
the Stockholder regarding (i) the Stockholder's power, authority and legal
capacity to enter into such sale and to transfer valid right, title and interest
in such Restricted Shares, (i i) the Stockholder's ownership of such Restricted
Shares and the absence of any liens, pledges, and other encumbrances on such
Restricted Shares and (iii) the absence of any violation, default, or
acceleration of any agreement or instrument pursuant to which the Stockholder or
the Stockholder's assets are bound resulting from such sale.
(d) In the event of the Cessation of Active Practice, the death or
permanent disability of the Stockholder, the Company shall repurchase all of the
Unvested Shares of the Stockholder pursuant to the following terms. The
repurchase price for each Unvested Share shall be equal to the Original Value of
such share, and such repurchase price shall be paid in full in cash not later
than sixty (60) days after the date of Cessation of Active Practice, death or
permanent disability of the Stockholder. For purposes of this Section 3(d), if
the Stockholder is insured under a disability insurance policy, the
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determination under such policy as to whether the Stockholder's condition
constitutes a permanent disability shall be binding on the parties hereto for
purposes of this Section 3(d). If the Stockholder is not insured under a policy
of disability insurance, such determination shall be made by an independent
qualified physician proposed by the Medical Group, subject to the approval of
the Company, which approval shall not be unreasonably withheld.
(e) In the event that the Stockholder is required, prior to the
consummation of an initial public offering of the Company's Common Stock
pursuant to the 1933 Act or prior to the second anniversary of the date hereof,
whichever is later, to pay any state or Federal taxes in connection with the
receipt of the Restricted Shares hereunder, the Stockholder shall have the right
to sell to the Company, and the Company shall be obligated to purchase from the
Stockholder, for the purchase price determined in accordance with this Section
3, such number of shares of Vested Stock as the Stockholder may tender to the
Company, provided that the purchase price therefor shall not exceed the total
amount of the Stockholder's tax liability incurred in connection with the
receipt of such stock. In the event that the Stockholder desires to exercise the
right conferred under this Section 3(e), the Stockholder shall give notice to
the Company not earlier than forty-five (45) days prior to, nor later than
forty-five (45) days after, the date on which such taxes are due and payable,
and the Stockholder shall furnish to the Company reasonable documentation
prepared by the Stockholder's certified public accountant establishing the amo
unt of such tax liability.
(f) Notwithstanding anything to the contrary contained in this Agreement,
all repurchases of Restricted Shares by the Company shall be subject to
applicable restrictions, if any, contained in Federal law or in the Delaware
General Corporation Law and, if any such restrictions prohibit or otherwise
delay the repurchase of Restricted Shares hereunder which the Company is
otherwise entitled or required to make, the Company may make such repurchases as
soon as it is permitted to do so under the applicable Federal law or the
Delaware General Corporation Law.
(g) In the event that any Restricted Shares are repurchased pursuant to
this Section 3 (other than pursuant to Section 3(e)), the Stockholder and his or
her successors and assigns shall, at the Company's expense, take all reasonable
steps to obtain all required third-party, governmental and regulatory consents
and approvals and take all other reasonable actions necessary to facilitate
consummation of such repurchase in a timely manner.
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4. Transfer Restriction; Legend.
Except as otherwise expressly provided in Section 3 and except for
Permitted Transfers, the Stockholder may not sell or transfer or agree to sell
or transfer ("Sale" or "Sell") any Restricted Shares unless such Sale shall be
in accordance with the procedures set forth in this Section 4; provided,
however, that with respect to this Section 4, Restricted Shares, at any point in
time, shall be limited to Vested Shares and at no time shall the Stockholder
have the right to Sell Unvested Shares (except as provided in Sections 3(b) and
3(d) hereof):
(a) In the event that the Stockholder receives a bona fide offer from a
third party (the "Prospective Stockholder") to purchase all or any part of the
Restricted Shares owned by the Stockholder, the Stockholder shall deliver to the
Company a written notice (the "Offer Notice"), which shall be irrevocable for a
period of fifteen (15) business days after delivery thereof (the "Offer
Period"), offering (the "Offer") all of the Restricted Shares proposed to be
Sold by the Stockholder to the Prospective Stockholder at the purchase price and
on the terms of the proposed Sale to the Prospective Stockholder (such Offer
Notice shall include the foregoing information, a copy of the Prospective
Stockholder's bona fide offer and all other relevant terms of the proposed Sale,
including the identification of the Prospective Stockholder). The Company shall
have the right and option, for a period of fifteen (15) business days after
delivery of the Offer Notice, to repurchase all of the Restricted Shares so
offered at the purchase price and on the terms stated in the Offer Notice. Such
acceptance shall be made by delivering a written notice to the Stockholder
within said fifteen (15) business-day period.
(b) Sales of Restricted Shares under the terms of Section 4(a) above shall
be made on a mutually satisfactory business day within fifteen (15) business
days after the expiration of the Offer Period. Delivery of certificates or other
instruments evidencing such Restricted Shares duly endorsed for transfer shall
be made on such date against payment of the purchase price therefor.
(c) If the Company fails to purchase all of the Restricted Shares offered
for Sale pursuant to the Offer Notice, then at any time within sixty (60)
business days after the expiration of the Offer Period the Stockholder may Sell
all or any part of the remaining Restricted Shares so offered for Sale on terms
no more favorable to the Prospective Stockholder than the terms stated in the
Offer Notice; provided, however, that the Stockholder shall not, under any
circumstances, Sell any Restricted Shares to the Prospective Stockholder if the
Board of Directors of the Company, in its sole discretion, determines in good
faith that the Prospective Stockholder is a competitor, or an Affiliate of a
competitor, of the Company or that such
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Prospective Stockholder's ownership of such Restricted Shares would be contrary
to the best interests of the Company. In the event that all of such Restricted
Shares are not Sold by the Stockholder to the Prospective Stockholder during
such period, the right of the Stockholder to Sell such Restricted Shares to the
Prospective Stockholder shall expire and the obligations of the Stockholder
pursuant to this Section 4 shall be reinstated.
(d) Any Permitted Transferee (other than the Company and any transferee
pursuant to Section 17.5 of the Management Services Agreement), shall, as a
condition to such transfer, (i) agree to be bound by all of the provisions of
this Agreement applicable to the Stockholder and shall evidence such agreement
by executing and delivering to the Company a joinder to this Agreement in form
and substance satisfactory to the Company, and (ii) if such transferee is a
partner in or an equity owner of the Medical Group, execute a noncompetition
agreement in form and substance satisfactory to the Company (if such transferee
is not, as of the date of such transfer, a party to such an agreement with the
Company).
(e) The certificate(s) representing the Restricted Shares will bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UN DER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY APPLICABLE STATE SECURITIES OR "BLUE-SKY" LAWS. THESE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR LAWS.
ADDITIONALLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN REPURCHASE OPTIONS, TRANSFER RESTRICTIONS AND CERTAIN OTHER
AGREEMENTS SET FORTH IN A RESTRICTED STOCK AGREEMENT DATED AS OF MAY 6,
1997, BETWEEN THE STOCKHOLDER AND BONE, MUSCLE AND JOINT, INC. A COPY OF
SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S
PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
(f) The restrictions on transfers of Vested Shares set forth in this
Section 4 shall expire, and shall be of no further force or effect, upon the
consummation of initial public offering of the Company's Common Stock pursuant
to the 1933 Act.
5. Registration Rights.
(a) Piggyback Registration. If the Company, at any time after that date
which is six months after the consummation of the initial public offering of the
Common Stock, proposes for any reason to register Primary Shares or Other Shares
under the Securities Act (other than on Form S-4 or Form S-8 promulgated under
the Securities Act or any successor forms thereto), it
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shall promptly give written notice to the Stockholders of its intention so to
register the Primary Shares or Other Shares and, upon the written request, given
within 15 days after delivery of any such notice by the Company, of any
Stockholder to include in such registration Registrable Shares held by such
Stockholder (which request shall specify the number of Registrable Shares
proposed to be included in such registration), the Company shall use its best
efforts to cause all such Registrable Shares to be included in such registration
on the same terms and conditions as the securities otherwise being sold in such
registration; provided, however, that if the managing underwriter advises the
Company that the inclusion of all Registrable Shares requested by the
Stockholders to be included in such registration, together with the inclusion of
all Other Shares, would interfere with the successful marketing (including
pricing) of Primary Shares proposed to be registered by the Company, then the
number of Primary Shares, Registrable Shares and Other Shares proposed to be
included in such registration shall be included in the following order:
(i)first, the Primary Shares;
(ii) second, the Venture Capital Shares requested to be included in
such registration by the Venture Capitalists (pro rata based on the number
of Venture Capital Shares held by all Venture Capitalists requesting
inclusion of Venture Capital Shares in such registration) ;
(iii) third, the Other Shares in such proportion as shall be
determined by the Company; and
(iv) fourth, the Registrable Shares requested to be included in such
registration by the Stockholders (pro rata based on the number of
Registrable Shares held by all Stockholders requesting inclusion of
Registrable Shares in such registration).
(b) Condition to Registration Obligations. The Corporation shall not be
obligated to effect the registration of the Registrable Shares pursuant to
Section 5(a) above unless the Stockholder executes a power of attorney, custody
arrangement and other documents customary in such transactions and reasonably
required by the managing underwriter thereof prior to the filing of the
registration statement.
(c) Holdback Agreement. If the Company at any time shall register shares of
Common Stock under the Securities Act (including any registration pursuant to
Section 5(a) above) for sale to the public, the Stockholder shall not sell
publicly, make any short sale of, grant any option for the purchase of, or
otherwise dispose publicly of, any Restricted Shares (other than those shares of
Common Stock included in such registration pursuant to Section 5(a) above)
without the prior written
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consent of the Company for a period designated by the Company in writing to the
holders of Registrable Shares, which period shall not begin more than 10 days
prior to the effectiveness of the registration statement pursuant to which such
public offering shall be made and shall not last more than 180 days after the
effective date of such registration statement.
(d) Indemnification. In connection with any registration of Registrable
Shares under the Securities Act pursuant to this Agreement, the Stockholder
shall indemnify and hold harmless the Company, each director of the Company,
each officer of the Company who shall sign such registration statement, each
underwriter, broker or other person acting on behalf of the holders of
Registrable Shares and each person who controls any of the foregoing persons
within the meaning of the Securities Act with respect to any statement or
omission from such registration statement, any preliminary prospectus or final
prospectus contained therein or otherwise filed with the Commission, any
amendment or supplement thereto or any document incident to registration or
qualification of any Registrable Shares, if such statement or omission was made
in reliance upon and in conformity with written information furnished to the
Company or such underwriter through an instrument duly executed by such ho lder
of Registrable Shares specifically for use in connection with the preparation of
such registration statement, preliminary prospectus, final prospectus,
amendment, supplement or document.
(e) Information by Stockholder. In the event the Stockholder elects to sell
Registrable Shares pursuant to Section 5(a) above, the Stockholder shall furnish
to the Company such written information regarding the Stockholder and the
distribution proposed by the Stockholder as the Company may reasonably request
in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Section 5.
6. Definitions.
(a) "Affiliate" means, with respect to any Person, (a) any director,
officer or partner of such Person and (b) any other Person that, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person. The term "control" includes,
without limitation, the possession, directly or indirectly, of the power to
direct the management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
(b) "Fair Market Value" of each share of Restricted Stock means the average
of the closing prices of the sales of the Common Stock on all securities
exchanges on which the Common Stock may at the time be listed, or, if there have
been no sales
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on any such exchange on any given day, the average of the last bid and asked
prices on all such exchanges at the end of such day, or, if on any given day the
Common Stock is not so listed, the average of the representative bid and asked
prices quoted in the Nasdaq Stock Market National Market System ("Nasdaq") as of
4:00 P.M., New York time, or, if on any given day the Common Stock is not quoted
in Nasdaq, the average of the bid and asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau
Incorporated, or any similar successor organization, in each such case averaged
over a period of 21 days consisting of the day as of which the Fair Market Value
is being determined and the 20 consecutive trading days prior to such day. If at
any time the Common Stock is not listed on any securities exchange or quoted in
Nasdaq or the over-the-counter market, the Fair Market Value shall be that value
jointly determined by the Stockholder and the Company, provided that if they
cannot so agree, such value shall be determined by a mutually acceptable
investment banking or other qua lified firm of national or regional reputation,
retained jointly by the Company and the Medical Group, and all fees, expenses
and other charges of such firm incurred in connection with such determination of
Fair Market Value shall be borne and shared equally by the Company and the
Medical Group. In the event that the parties are unable to agree upon such an
investment banking or other qualified firm within ten (10) days after the date
on which either party may initially propose such a firm, a qualified firm shall
be selected in the following manner:
First, the Stockholder shall send a list of four such firms, arranged
in order of the Stockholder's preference, by written notice to the Company
within seven (7) days after the expiration of the above referenced 10-day
period. If the Stockholder does not furnish such list to the Company within
the required time period, the Company may, within seven (7) days following
expiration of the initial seven-day period, submit a list of four such
firms to the Stockholder.
Second, the Company (or the Stockholder, as applicable) shall select,
within seven (7) days after receipt of the above-referenced list, one of
the firms identified on such list and shall give written notice thereof to
the other party. If the recipient of such list does not make any such
selection, the firm identified as the first choice on such list shall be
deemed acceptable and agreeable to each of the parties.
(c) "Internal Revenue Code" means the Internal Revenue Code of 1986, as the
same may be amended or supplemented from time to time, or any successor statute,
and the rules and regulations thereunder, as the same are from time to time in
effect.
(d) "Original Value" of each share of Restricted Stock purchased hereunder
will be equal to $0.001 (as
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proportionately adjusted for all subsequent stock splits, stock dividends and
other recapitalizations).
(e) "Other Shares" means at any time those shares of Common Stock that do
not constitute Primary Shares or Registrable Shares.
(f) "Person" shall be construed broadly and shall include, without
limitation, an individual, a partnership, an investment fund, a limited
liability corporation or partnership, a corporation, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political subdivision thereof.
(g) "Permitted Transferee" means, as to the Stockholder, any transferee who
acquires the Restricted Shares pursuant to a Permitted Transfer or any other
transfer made in accordance with the provisions of this Agreement.
(h) "Permitted Transfer" means, as to the Stockholder, (i) any sale or
transfer of Vested Shares to (A) the spouse or lineal descendants of such
Stockholder or (B) a trust for the benefit of any of the foregoing and (ii) any
sale or transfer of Vested Shares or Unvested Shares to any other Stockholder,
or any physician who, as of the date of such transfer, is a partner of or equity
owner in the Medical Group.
(i) "Primary Shares" means at any time the authorized but unissued shares
of Common Stock or shares of Common Stock held by the Company in its treasury.
(j) "Public Sale" means any sale of Restricted Stock to the public pursuant
to an offering registered under the 1933 Act or to the public through a broker,
dealer or market maker pursuant to the provisions of Rule 144 adopted under the
1933 Act.
(k) "Registrable Shares" means the shares of Common Stock or any other
securities which by their terms are exercisable or exchangeable for or
convertible into Common Stock and any securities received in respect thereof,
which are held by the Stockholders and which have not theretofore been sold to
the public pursuant to a registration statement under the Securities Act or
pursuant to Rule 144; provided that, unvested shares shall not under any
circumstance be Registrable Shares.
(l) "Restricted Shares" has the meaning set forth in Section 1(a). The
Restricted Shares will continue to be Restricted Shares in the hands of any
holder other than the Stockholder (except for the Company and except for
transferees in a Public Sale), and except as otherwise provided herein, each
such other holder of the Restricted Shares will succeed to all
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rights and obligations attributable to the Stockholder as the holder of the
Restricted Shares hereunder. The Restricted Shares will also include shares of
the Company's capital stock issued with respect to the Restricted Stock by way
of a stock split, stock dividend or other recapitalization.
(m) "Venture Capitalists" means Xxxxxx Xxxxxx and those venture capital
firms that have acquired, prior to the date hereof, and may acquire, at any time
hereafter, securities of the Company and in connection with such acquisition
have obtained or may obtain registration rights.
(n) "Venture Capital Shares" means the shares of Common Stock or any other
securities which by their terms are exercisable or exchangeable for or
convertible into Common Stock and any securities received in respect thereof,
which are held by a Venture Capitalist and which have not theretofore been sold
to the public pursuant to a registration statement under the Securities Act or
pursuant to Rule 144.
(o) "1933 Act" means the Securities Act of 1933, as the same may be amended
or supplemented from time to time, or any successor statute, and the rules and
regulations thereunder, as the same are from time to time in effect.
7. Indemnification.
(a) The Company shall indemnify, defend and hold harmless the Stockholder
against all liability, loss or damage, together with all reasonable costs and
expenses related thereto (including reasonable legal fees and expenses),
relating to or arising from the untruth, inaccuracy or breach of any of the
representations, warranties or agreements of the Company contained in this
Agreement.
(b) The Stockholder shall indemnify and hold harmless the Company against
all liability, loss or damage, together with all reasonable costs and expenses
related thereto (including reasonable legal fees and expenses), relating to or
arising from the untruth, inaccuracy or breach of any of the representations,
warranties or agreements of the Stockholder contained in this Agreement.
8. General Provisions.
(a) Transfers in Violation of Agreement. Any sale, transfer, assignment or
other disposition (whether with or without consideration and whether voluntarily
or involuntarily or by operation of law) (each, a "Transfer") or attempted
Transfer of any Restricted Shares in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported
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transferee of such Restricted Shares as the owner of such stock for any purpose.
(b) Binding Effect of Management Services Agreement. The Stockholder hereby
agrees to be bound by the provisions of Sections 9.11 and 14 of the Management
Services Agreement, which provisions such Stockholder has reviewed.
(c) Severability. It is the desire and intent of the parties hereto that
the provisions of this Agreement be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
(d) Entire Agreement. This Agreement, those documents expressly referred to
herein and other documents of even date herewith embody the complete agreement
and understanding among the parties hereto with respect to the subject matter
hereof and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
(e) Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
(f) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Stockholder, the Company and their respective successors, permitted assigns,
heirs, representatives and estate, as the case may be (including subsequent
holders of Restricted Stock); provided, however, that the rights and obligations
of the Stockholder under this Agreement shall not be assignable except in
connection with a Permitted Transfer of Restricted Shares hereunder and;
provided further, however, that the rights of the Stockholder set forth in
Section 5 hereof may not be assigned to any transferee.
-14-
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without giving effect to any
choice of law or conflicting provision or rule (whether of the State of Florida,
or any other jurisdiction), that would cause the laws of any jurisdiction other
than the State of Florida to be applied. In furtherance of the foregoing, the
internal law of the State of Florida will control the interpretation and
construction of this agreement, even if under such jurisdiction's choice of law
or conflict of law analysis, the substantive law of some other jurisdiction
would ordinarily apply.
(h) Jurisdiction.
(i) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of
any Florida state court or Federal court of the United States of America
sitting in the State of Florida, and any appellate court thereof, in any
action or proceeding arising out of or relating to this Agreement or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of
any such action or proceeding may be heard and determined in any such
Florida state court or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law. Nothing in this Agreement shall affect any right that any party may
otherwise have to bring any action or proceeding relating to this Agreement
in the courts of any other jurisdiction.
(ii) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement in
any Florida state or Federal court. Each of the parties hereto irrevocably
waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any
such court.
(i) Remedies. Each of the parties to this Agreement shall be entitled to
enforce its rights under this Agreement specifically to recover damages and
costs (including reasonable attorneys' fees) for any breach of any provision of
this Agreement and to exercise all other rights existing in its favor. The
parties hereto agree and acknowledge that money damages may not be an adequate
remedy for the Company in the event of a breach of the provisions of this
Agreement by the Stockholder and that the Company may, in its sole discretion,
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apply to any court of law or equity of competent jurisdiction for specific
performance and/or other injunctive relief (without posting any bond or deposit)
in order to enforce or prevent any violations of the provisions of this
Agreement.
(j) Amendment and Waiver. The provisions of this Agreement may be amended
and waived only with the prior written consent of the Company and the
Stockholder and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall be construed as a waiver of such provisions
or affect the validity, binding effect or enforceability of this Agreement or
any provision hereof; provided, however, that the Company may amend, without the
Stockholder's consent, Schedule A hereto upon consummation of a Permitted
Transfer of shares hereunder to reflect the then current ownership of the
Restricted Stock.
(k) Notices. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, transmitted via telecopier, mailed by
first class mail (postage prepaid and return receipt requested) or sent by
nationally-recognized overnight courier service (charges prepaid) to the
recipient at the address below indicated or at such other address or to the
attention of such other person as the recipient party has specified by prior
written notice to the sending party. Notices will be deemed to have been given
hereunder and received when delivered personally, when received if transmitted
via telecopier, five days a fter deposit in the U.S. mail and one business day
after deposit with a nationally-recognized overnight courier service.
(i) If to the Company, to:
Bone, Muscle and Joint, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000X
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxx, M.D., President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000;
with a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Held, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000; and
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(ii) If to the Stockholder, to:
Xxxxxx X. Xxxxxxxxxxx, M.D.
0000 XX 0xx Xxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000;
with copies to:
Lauderdale Orthopaedic Surgeons
0000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxxx, M.D.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000; and
Xxxxx & Menkhaus, P.A.
0000 X. Xxxxxxx Xxxxxxx, Xxxxx 000X
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000.
(l) Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or holiday in the State
of Florida, the time period for giving notice or taking action shall be
automatically extended to the business day immediately following such Saturday,
Sunday or holiday.
(m) Attorneys' Fees. In the event of any dispute or controversy arising out
of or relating to this Agreement, the prevailing party shall be entitled to
recover from the other party all costs and expenses, including attorneys' fees
and accountants' fees, incurred in connection with such dispute or controversy.
(n) Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
(o) Construction. Where specific language is used to clarify by example a
general statement contained herein, such specific language shall not be deemed
to modify, limit or restrict in any manner the construction of the general
statement to which i t relates. The language used in this Agreement shall be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party.
(p) Nouns and Pronouns. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the
-17-
singular form of nouns and pronouns shall include the plural and vice-versa.
* * * *
-18-
IN WITNESS WHEREOF, the parties hereto have executed this Restricted Stock
Agreement effective as of the date first written above.
COMPANY
-------
BONE, MUSCLE AND JOINT, INC.
By:__________________________
Name:
Title:
STOCKHOLDER
-----------
-----------------------------
Xxxxxx X. Xxxxxxxxxxx, M.D.
MEDICAL GROUP
-------------
ACCEPTED AND AGREED
AS TO PARAGRAPHS 3(d)(iv), and 6(b)
LAUDERDALE ORTHOPAEDIC SURGEONS
By:_________________________
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have executed this Restricted Stock
Agreement effective as of the date first written above.
COMPANY
-------
BONE, MUSCLE AND JOINT, INC.
By:__________________________
Name:
Title:
STOCKHOLDER
-----------
-----------------------------
MEDICAL GROUP
-------------
ACCEPTED AND AGREED
AS TO PARAGRAPHS 3(d)(iv), and 6(b)
LAUDERDALE ORTHOPAEDIC SURGEONS
By:_________________________
Name:
Title:
EXECUTION COPY
--------------
AMENDMENT NO. 1 TO THE RESTRICTED
STOCK AGREEMENT dated as of
September 4, 1997, between BONE,
MUSCLE AND JOINT, INC., a Delaware
corporation (the "Company"), and
the individual identified on the
signature page hereof (the
"Stockholder").
Reference is made to the Restricted Stock Agreement entered into as of May
6, 1997 (the "Restricted Stock Agreement"), pursuant to which the Stockholder
acquired shares (the "Restricted Shares") of the common stock of the Company,
par value $0.001 per share (the "Common Stock"). The parties hereto desire to
amend certain of the provisions of the Restricted Stock Agreement relating to
the vesting of the Restricted Shares and the transferability thereof.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
Section 1. All capitalized terms used but not defined herein have the
meanings ascribed in the Restricted Stock Agreement.
Section 2. to the Restricted Stock Agreement is hereby amended in its
entirety, to read as follows:
"2. Vesting of the Restricted Shares.
(a) Except as otherwise provided in Section 2(b) below, the Restricted
Shares shall become vested in accordance with the following schedule, if,
as of each such date, (i) the Management Services Agreement has not been
terminated, (ii) there has not been a Cessation of Active Practice (as
defined in paragraph 2(c) below) by the Stockholder, (iii) the Stockholder
has not become permanently disabled (as described in Section 3(a)(iii)
below), and (iv) the Stockholder has not died:
Anniversary Date Percentage of
of this Agreement Restricted Stock Vested
----------------- -----------------------
First 25%
Second 25%
Third 25%
Fourth 25%
For purposes of this Agreement, "Anniversary Date of this Agreement" means
April 1 of each year after 1997. Restricted Shares which have become vested
are referred to herein as "Vested Shares" and all other Restricted Shares
are referred to herein as "Unvested Shares."
(b) Notwithstanding the foregoing, in the event of the death of the
Stockholder, in addition to any shares that have vested in accordance with
paragraph 2(a) above, the number of Unvested Shares, if any, that would
have become Vested Shares during the 18-month period immediately following
the date of death had such death not occurred shall be deemed Vested Shares
as of the date of death.
(c) For purposes of this Agreement, "Cessation of Active Practice"
means the Stockholder's resignation from or termination of employment with
the Medical Group (other than by reason of death or permanent disability)."
Section 3. to the Restricted Stock Agreement is hereby amended in its
entirety, to read as follows:
"3. Forfeiture and Repurchase of Restricted Shares.
(a) In the event of the Cessation of Active Practice by or the death
or permanent disability of the Stockholder (the "Forfeiture Event"), the
following provisions shall apply.
(i) The Stockholder or the estate (in the case of death) of the
Stockholder shall transfer to the Medical Group, all of the Unvested
Shares held by the Stockholder. Such Unvested Shares shall be
transferred for no consideration from the Company and the stock
certificate(s) representing those shares shall be delivered to the
Company, no later than thirty (30) days after the Forfeiture Event,
duly endorsed for transfer in accordance with this Section 3(a). The
Company shall, within thirty (30) days after its receipt of a joinder
to this Agreement executed by the Medical Group, issue and deliver to
the Medical Group a certificate representing the Unvested Shares. Such
Unvested Shares shall continue to vest according to the vesting
schedule set forth in Section 2(a) above.
(ii) The Medical Group shall not Sell (as hereinafter defined)
any Unvested Shares to any Person, other than to one or more physician
-2-
employees or equity owners of the Medical Group, who prior to the
receipt of such shares from the Medical Group had not acquired any
shares of the Company's Common Stock pursuant to the Management
Services Agreement between the Company and the Medical Group. As a
condition to any such Sale, the transferee shall execute and deliver
to the Company a Restricted Stock Agreement in substantially the form
of this Agreement, effective as of the date of transfer of such
shares. Any Unvested Shares distributed according to this Section 3(a)
shall be subject to a vesting schedule identical to the schedule set
forth in Section 2(a) hereof.
(iii) For purposes of this Agreement, if the Stockholder is
insured under a disability insurance policy, the determination under
such policy as to whether such Stockholder's condition constitutes a
permanent disability shall be binding on the parties hereto. If the
Stockholder is not insured under a policy of disability insurance,
such determination shall be made by an independent qualified physician
proposed by the Medical Group, subject to the approval of the Company,
which approval shall not be unreasonably withheld.
(b) In the event of the termination of the Management Services
Agreement pursuant to Section 13 thereof (the "Repurchase Event") on or
before the fourth anniversary of the Commencement Date (as defined
therein), the Company shall have the right (but not the obligation) (the
"Repurchase Option"), to be exercised in its sole discretion, to repurchase
all or any portion of the Restricted Stock (whether vested or unvested and
whether held by the Stockholder or one or more of the Stockholder's
Permitted Transferees) pursuant to the terms and conditions set forth in
this Section 3.
(i) The Company may elect to repurchase all or any portion of the
Restricted Shares by delivering written notice (the "Repurchase
Notice") to the Stockholder within ninety (90) days after the
Repurchase Event; provided, however, that, if the Company elects to
repurchase less than all of the Restricted Shares, the Company shall
first repurchase Unvested Shares and then repurchase that number of
Vested Shares, if any, as the Company may, in its sole discretion,
elect. The Repurchase Notice shall set forth the number of Unvested
Shares and Vested Shares to be repurchased, the aggregate
consideration to be
-3-
paid for such shares, and the time and place for the closing of the
transaction. The purchase price payable for each Unvested Share shall
equal the Original Value for such share and the purchase price payable
for each Vested Share shall equal the Fair Market Value for such
share. If the Company decides to repurchase Restricted Shares from any
Stockholder pursuant to this Section 3(b), then the Company must
purchase that number of Restricted Stock which it has elected to
repurchase from all of the Stockholders pro rata according to the
number of shares of Restricted Stock held by all of the Stockholders
at the time of delivery of such Repurchase Notice (determined as
nearly as practicable to the nearest whole share).
(ii) The closing of the repurchase of Restricted Shares pursuant
to the Repurchase Option shall take place on the date designated by
the Company in the Repurchase Notice, which date shall not be more
than sixty (60) days nor less than five (5) days after the delivery of
the Repurchase Notice. The Company shall pay for Restricted Shares to
be purchased pursuant to the Repurchase Option by delivery of a check
or wire transfer of funds in the aggregate amount of the repurchase
price for the shares; provided, however, that in the event that the
Medical Group is obligated to pay to the Company any sums in
connection with the repurchase of assets by the Medical Group pursuant
to Section 13.5 or 14.1 of the Management Services Agreement, the
total amount of such sums may be offset by the Company against any
amounts owed by the Company to the Stockholders pursuant to this
Agreement (if such Stockholder is, at such time, an equity owner of or
partner in the Medical Group), such offset amount to be allocated pro
rata among all of the Stockholders who at such time hold equity of or
are partners in the Medical Group. The Company's payment under this
Section 3(b) shall be subject to the terms and provisions of any
financing agreement, if any, to which the Company is a party, its
certificate of incorporation and the operation of law. The Company
shall be entitled to require the signature of the Stockholder to be
guaranteed and to receive representations and warranties from the
Stockholder regarding (x) the Stockholder's power, authority and legal
capacity to enter into such sale and to transfer valid right, title
and interest in such Restricted Shares, (y) the Stockholder's
ownership of such Restricted Shares and the absence of any liens,
-4-
pledges, and other encumbrances on such Restricted Shares and (z) the
absence of any violation, default, or acceleration of any agreement or
instrument pursuant to which the Stockholder or the Stockholder's
assets are bound resulting from such sale.
(iii) In the event that the Stockholder is required, prior to the
consummation of an initial public offering of the Company's Common
Stock pursuant to the 1933 Act or prior to the second anniversary of
the date hereof, whichever is later, to pay any state or Federal taxes
in connection with the receipt of the Restricted Shares hereunder, the
Stockholder shall have the right to Sell to the Company, and the
Company shall be obligated to purchase from the Stockholder, for the
purchase price determined in accordance with this Section 3, such
number of shares of Vested Stock, which shares shall have been held by
the Stockholder for at least six (6) months, as the Stockholder may
tender to the Company, provided that the purchase price therefor shall
not exceed the total amount of the Stockholder's tax liability
incurred in connection with the receipt of such stock. In the event
that the Stockholder desires to exercise the right conferred under
this Section 3(c), the Stockholder shall give notice to the Company
not earlier than forty-five (45) days prior to, nor later than
forty-five (45) days after, the date on which such taxes are due and
payable, and the Stockholder shall furnish to the Company reasonable
documentation prepared by the Stockholder's certified public
accountant establishing the amount of such tax liability.
(c) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Restricted Shares by the Company under this
Section 3 shall be subject to applicable restrictions, if any, contained in
Federal law or in the Delaware General Corporation Law and, if any such
restrictions prohibit or otherwise delay the repurchase of Restricted
Shares hereunder which the Company is otherwise entitled or required to
make, the Company may make such repurchases as soon as it is permitted to
do so under applicable Federal law or the Delaware General Corporation Law.
(d) In the event that any Restricted Shares are repurchased pursuant
to this Section 3 (other than pursuant to Section 3(c)), the Stockholder
and his or her successors and assigns shall, at the Company's
-5-
expense, take all reasonable steps to obtain all required third-party,
governmental and regulatory consents and approvals and take all other
reasonable actions necessary to facilitate consummation of such repurchase
in a timely manner."
SECTION 4. Section 8(b) of the Restricted Stock Agreement is hereby amended
by deleting "Section 14" on the third line and inserting "Section 13.6" in lieu
thereof.
SECTION 5. This Amendment No. 1 shall be deemed effective as of May 6,
1997. Except as expressly provided in this Amendment No. 1, the Restricted Stock
Agreement remains in full force and effect in accordance with its terms.
SECTION 6. This Amendment No. 1 may be executed in more than one
counterpart, and by the parties hereto in separate counterparts, and each such
counterpart shall constitute an original instrument, but all such counterparts
taken together shall constitute one and the same Amendment.
SECTION 74. This Amendment No. 1 shall by governed by, construed and
interpreted in accordance with the laws of the State of Florida.
* * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1
to the Restricted Stock Agreement effective as of the date first written above.
COMPANY
-------
BONE, MUSCLE AND JOINT, INC.
By:__________________________
STOCKHOLDER
-----------
__________________________
Signature
__________________________
Printed Name
