RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (this "Agreement") is made as of September
29, 2000 (the "Effective Date") between Harborside Healthcare Corporation, a
Delaware corporation (the "Company"), and ____________ ("Grantee").
R E C I T A L S
A. The Company adopted the Harborside Healthcare Stock Incentive Plan (the
"Plan"), a copy of which has been delivered to Grantee.
B. The Company desires to grant Grantee a proprietary interest in the Company
in order to encourage Grantee's contribution to the success and progress of
the Company.
C. In accordance with the Plan, the Committee (as defined in the Plan) is
willing to grant to Grantee Class C Shares, $0.01 par value per share
("Class C Shares"), of the Company, subject to the terms and conditions of
the Plan and this Agreement.
AGREEMENTS
1. Definitions. Capitalized terms used herein shall have the following meanings:
"Act" means the Securities Act of 1933, as amended.
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. A Person will be deemed to control a corporation if
such Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise.
"Agreement" means this Restricted Stock Agreement.
"Annual Valuation" has the meaning set forth in Section 4(c).
"Approved Sale" means a transaction or a series of related transactions
which results in a bona fide, unaffiliated change of economic beneficial
ownership of the Company or its business of greater than 50% (disregarding for
this purpose any disparate voting rights attributable to the outstanding stock
of the Company), whether pursuant to the sale of the stock of the Company, the
sale of the assets of the Company, or a merger or consolidation (other than a
sale of stock by an Initial Stockholder to (i) another Initial Stockholder or
affiliate thereof, or (ii) a non-U.S. entity with respect to which an Initial
Stockholder or affiliate thereof has an administrative relationship).
"Board" has the meaning set forth in Section 4(c).
"Board of Directors" means the Board of Directors of the Company.
"Cause," when used in connection with the termination of employment of the
Grantee, has the meaning set forth in the employment agreement between the
Company and the Grantee, or if there is no such employment agreement, means (a)
conviction of the Grantee for a felony, or the entry by the Grantee of a plea of
guilty or nolo contendere to a felony, (b) the commission of an act of fraud
involving dishonesty for personal gain which is injurious to the Company, (c)
the willful and continued refusal by the Grantee to substantially perform his
duties with the Company (other than any such refusal resulting from his
incapacity due to mental illness or physical illness or injury), after a demand
for substantial performance is delivered to the Grantee by the Board of
Directors, where such demand identifies the manner in which the Board of
Directors believes that the Grantee has refused to substantially perform his
duties and the passage of a reasonable period of time as specified by the Board
of Directors for the Grantee to comply with such demand or (d) the willful
engaging by the Grantee in gross misconduct injurious to the Company or its
Subsidiaries.
"Certificate of Incorporation" means the Restated Certificate of
Incorporation of the Company setting forth the rights, preferences and
privileges of and restrictions on the Class C Stock.
"Class C Shares" has the meaning set forth in recital C.
"Closing Date" means August 11, 1998
"Company" is defined in the preamble.
"Designated Price" equals $0.00 per share.
"Effective Date" has the meaning set forth in the preamble.
"Fair Market Value" means the value of a Share, as of the Termination Date,
determined pursuant to Section 4(c).
"Fiscal Year" means the fiscal year of the Company.
"Good Reason" means, unless the Grantee shall have consented in writing
thereto, any of the following:
(a) except as specifically provided in the Grantee's employment agreement, if
any, the assignment to the Grantee of duties, or the assignment of the
Grantee to a position, constituting a material diminution in the Grantee's
role, responsibilities or authority compared with his role,
responsibilities or authority on the Effective Date;
(b) a reduction by the Company in the Executive's base salary as in effect on
the Effective Date as the same may be increased from time to time or a
reduction of the potential annual bonus expressed as a percent of base
salary (subject to attainment of goals, Board of Directors discretion and
other conditions of the applicable bonus program) from the levels in effect
on the Effective Date as the same may be increased from time to time;
(c) a demand by the Company to the Grantee to relocate to any place that
exceeds a fifty (50) mile radius beyond the location at which the Grantee
performed his duties on the Effective Date; or
(d) any material breach of this Agreement or any breach of the employment
agreement between the Grantee and the Company, if any, on the part of the
Company.
"Grantee" has the meaning set forth in the preamble.
"Initial Public Offering" means the sale of any of the common stock of the
Company pursuant to a registration statement that has been declared effective
under the Act, if as a result of such sale (i) the issuer becomes a reporting
company under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as
amended, and (ii) such stock is traded on the New York Stock Exchange or the
American Stock Exchange, or is quoted on the NASDAQ National Market System or is
traded or quoted on any other national stock exchange or national securities
system.
"Initial Stockholders" means the stockholders of the Company who became
stockholders as of the Closing Date (other than any such stockholders who are
also employees of the Company or were stockholders of the Company prior to the
Closing Date) and any transferees of such stockholders prior to an Initial
Public Offering or an Approved Sale.
"Permitted Transferee" has the meaning set forth in Section 3.
"Person" means an individual, partnership, joint venture, limited liability
company, corporation, trust, unincorporated organization or a government or any
department or agency thereof.
"Repurchase Period" has the meaning set forth in Section 4(a).
"Restricted Period" has the meaning set forth in Section 2(b).
"Shares" has the meaning set forth in Section 2(a).
"Subsidiary" means any joint venture, corporation, partnership or other
entity as to which the Company, whether directly or indirectly, has more than
50% of the (i) voting rights or (ii) rights to capital or profits.
"Termination Date" means the date on which Grantee ceases to be employed by
the Company and all Subsidiaries for any reason.
"Vested Shares" has the meaning set forth in Section 2(b) hereof.
2. Grant of Shares; Vesting; Forfeiture.
(a) The Company hereby grants and delivers, and Grantee hereby accepts, ______
Class C Shares (the "Shares") in consideration of (i) the performance of
services by Grantee to the Company or a Subsidiary (ii) the cancellation
the Stock Option Agreement (if any) dated as of August 11, 1998 between the
Company and the Grantee, and (iii) the payment of $0.00.
(b) The Shares are subject to a restricted period (the "Restricted Period")
which begins on the date of this Agreement, and expires with respect to
one-third of the Shares on December 31, 2001 (the period beginning on the
date of this Agreement and ending on December 31, 2001 shall be referred to
as the "First Period"), one-third of the Shares on December 31, 2002 (the
period beginning on the date immediately following the end of the First
Period and ending on December 31, 2002 shall be referred to as the "Second
Period") and the remaining one-third of the Shares on December 31, 2003
(the period beginning on the date immediately following the end of the
Second Period and ending on December 31, 2003 shall be referred to as the
"Third Period"); provided, that Grantee remains continuously employed by
the Company or a Subsidiary through each such date. Shares for which the
Restricted Period has expired are referred to herein as "Vested Shares."
Upon any termination of Grantee's employment with the Company, all Shares
which have not previously vested or which do not vest in connection with
such termination pursuant to this Section 2(b), shall upon such termination
of employment be forfeited and returned to the Company.
Notwithstanding the foregoing, if Grantee's employment is terminated by the
Company or a Subsidiary without Cause or Grantee terminates his or her
employment with the Company for Good Reason, the Restricted Period with
respect to a portion of the Shares which would have vested at the end of
the then current period (i.e., First Period, Second Period or Third Period
(the "Applicable Period")) shall be considered Vested Shares. The portion
of such shares which shall be considered Vested Shares shall equal the
total number of shares which would have vested had Grantee been employed by
the Company at the end of the Applicable Period multiplied by a fraction,
the numerator of which equals the number of days which have elapsed in the
Applicable Period (through the Termination Date) and the denominator of
which equals the total number of days in the Applicable Period. In
addition, upon consummation of an Approved Sale (which occurs prior to an
Initial Public Offering), the Restricted Period with respect to all of
Grantee's outstanding unvested Shares shall expire and such Shares shall be
considered Vested Shares.
3. Restrictions on Transfers of Shares.
Subject to Section 4 hereof, prior to an Initial Public Offering or an
Approved Sale, or, if later, prior to the expiration of the Restricted Period,
the Shares shall not be transferable by the Grantee except to (a) his spouse,
child, estate, personal representative, heir or beneficiary, (b) a trust for the
benefit of the Grantee or his spouse, child or heir, or (c) a partnership, the
partners of which consist solely of the Grantee and/or his spouse, child, heir,
and/or successor (each, a "Permitted Transferee"). More particularly (but
without limiting the generality of the foregoing), the Shares may not be
assigned, transferred (except as set forth in the previous sentence), pledged or
hypothecated in any way (whether by operation of law or otherwise), and shall
not be subject to execution, attachment or similar process. This Agreement shall
be binding on and enforceable against any person who is a Permitted Transferee
of the Shares, and, for purposes of Sections 3, 4 and 5, the rights and
obligations relating to Shares owned by Grantee shall extend as well to Shares
owned by Permitted Transferees of Grantee and, unless the context otherwise
requires, each reference to Grantee in said Sections shall encompass also
Permitted Transferees of Grantee. Grantee may deliver to the Company an executed
beneficiary designation form (which beneficiary may be changed by subsequently
delivering another executed beneficiary form); provided, however, that if
Grantee fails to deliver an executed beneficiary form, the beneficiary listed in
Grantee's life insurance policy with his employer shall be his beneficiary under
this Agreement. The stockholders' register of Company shall bear a legend
referring to this Agreement and the restrictions contained herein.
4. Repurchase of Shares.
(a) Subject to Section 4(b), in the event that Grantee ceases to be employed by
the Company or a Subsidiary prior to an Initial Public Offering or an
Approved Sale, the Company, during the sixty (60) day period following
Grantee's Termination Date (the "Repurchase Period"), shall have a right to
purchase the Vested Shares (the "Repurchase Right"). This Repurchase Right
shall be freely assignable by the Company to an Affiliate of the Company or
to Investcorp Bank E.C. and its Affiliates or any other entity with whom
Investcorp Bank E.C. or any Affiliate thereof has an administrative
relationship. The purchase price for each Vested Share shall equal the Fair
Market Value, or, if the Company or a Subsidiary terminates Grantee for
Cause, the lower of Designated Price and Fair Market Value. If the Company
elects to purchase (or permits a designated assignee to purchase) the
Vested Shares, it shall notify Grantee at or before the end of the
Repurchase Period of such election and the purchase price shall be paid in
cash at a time set by the Company within thirty (30) days after the end of
the Repurchase Period, provided that Grantee has executed the transfer
documents required under applicable law. If Grantee fails to execute the
required transfer documents, the Vested Shares represented thereby shall be
deemed to have been purchased upon (i) the payment by the Company of the
purchase price to Grantee or his Permitted Transferee or (ii) notice to
Grantee or such Permitted Transferee that the Company is holding the
purchase price for the account of Grantee or such Permitted Transferee, and
upon such payment or notice Grantee and such Permitted Transferee will have
no further rights in or to such Shares. If the Company does not purchase
the Vested Shares, the restrictions on transfer thereof contained in
Section 3 of this Agreement shall terminate and be of no further force and
effect.
(b) In the event that, on the Termination Date, Grantee owns Vested Shares
which have been vested for less than six (6) months, the sixty (60) day
Repurchase Period for such Vested Shares will not commence on the
Termination Date but rather will commence on the first date on which all
such Vested Shares have been owned by Grantee for six (6) months.
(c) The Fair Market Value of Vested Shares to be repurchased by the Company or
its designated assignee, as applicable, pursuant to Section 4 shall be
determined in good faith by the Board of Directors (or a committee thereof
appointed by the Board of Directors) (the "Board"). The Board shall make
its determination of Fair Market Value annually (the "Annual Valuation")
within thirty (30) days following the completion of the Company's audited
financial statements for the year then completed and such determination
shall remain in effect until the Board makes the next Annual Valuation.
Notwithstanding the foregoing, if the Board or an investment banker or
appraiser appointed by the Company makes a determination of Fair Market
Value subsequent to an Annual Valuation, such subsequent determination
shall supersede the Annual Valuation then in effect and shall establish the
Fair Market Value until the next Annual Valuation. The Fair Market Value
shall be based on an assumed sale of 100% of the outstanding capital stock
of the Company (without reduction for minority interest or lack of
liquidity of the Vested Shares or similar discount). If such determination
of the Fair Market Value is challenged by Grantee, a mutually acceptable
investment banker or appraiser shall establish the Fair Market Value as of
the date of valuation referenced in the Annual Valuation or a subsequent
determination. The investment banker's or appraiser's determination shall
be conclusive and binding on the Company and Grantee. Upon request by
Grantee, the Company shall make available to Grantee a description of the
methodology employed by the investment banker or appraiser in making the
determination of Fair Market Value, which description shall include, to the
extent relevant, a listing of companies used in comparing market and
transaction valuations, the range of multiples applied, and the terminal
valuation, discount factor and multiples used in any discounted cash flow
analysis. The Company shall bear all costs incurred in connection with the
services of such investment banker or appraiser unless (i) the Fair Market
Value established by such investment banker or appraiser is less than or
equal to 120% but more than 110% of the determination challenged by
Grantee, in which case Grantee shall promptly pay or reimburse the Company
fifty percent (50%) for such costs, or (ii) the Fair Market Value
established by such investment banker or appraiser is equal to or less than
110% of the determination challenged by Grantee, in which case Grantee
shall promptly pay or reimburse the Company for one hundred percent (100%)
of such costs. If Grantee and the Company cannot agree upon an investment
banker or appraiser, they shall each choose an investment banker or
appraiser and the two shall choose a third investment banker or appraiser
who shall establish the Fair Market Value.
(d) The Grantee shall not be considered to have ceased to be employed by the
Company, the Company or a Subsidiary for purposes of this Agreement if he
or she continues to be employed by any company in the Company.
(e) Subject to Certificate of Incorporation. The Grantee acknowledges that the
Shares are subject to the terms of the Certificate of Incorporation.
5. Representations and Acknowledgments of Grantee.
(a) Grantee hereby represents and warrants to the Company as follows:
(i) Grantee is acquiring the Shares for investment for his own account and
without a view to further distribution of the Shares.
(ii) Grantee is key employee of the Company and has been given access to all
information that Grantee considers necessary to make an investment decision
as to the Shares.
(b) Grantee hereby acknowledges to the Company as follows: The Shares are being
transferred to Grantee without registration under the Act pursuant to
exemptions from registration thereunder. Grantee cannot transfer the Shares
except pursuant to an effective registration statement or an exemption from
registration under the Act and except as provided in this Agreement.
6. Governing Law. All terms of and rights under this Agreement shall be governed
by and construed in accordance with the internal laws of New York without giving
effect to principles of conflicts of law.
7. Notices. All notices, requests, demands and other communications pursuant to
this Agreement shall be in writing and shall be deemed to have been duly given
if personally delivered, telexed or telecopied to, or, if mailed, when received
by, the other party at the following addresses (or at such other address as
shall be given in writing by either party to the other):
If to the Company to:
Harborside Healthcare
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▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
If to Grantee to the address set forth below Grantee's signature below.
8. Amendments and Waivers. This Agreement may be amended, and any provision
hereof may be waived, only by a writing signed by the party to be charged.
9. Capitalizations, Exchanges, Etc. Affecting Shares; Adjustment of Designated
Price. The provisions of this Agreement shall apply to any and all shares of
capital stock of Company or any successor or assign of Company that may be
issued in respect of, in exchange for, or in substitution of, the Shares by
reason of any stock dividend, stock split, stock issuance, reverse stock split,
combination, recapitalization, reclassification, merger, Consolidation
Transaction or otherwise, other than an Approved Sale. Nothing herein shall
prohibit or restrict Company from taking any corporate action or engaging in any
corporate transaction of any kind, including, without limitation, any merger,
consolidation, liquidation or sale of assets.
10. Plan Controls. The Shares granted under this Agreement are subject to, and
the Company and Grantee agree to be bound by, all of the terms and conditions of
the Plan as the same may be amended from time to time in accordance with the
terms thereof, but no such amendment shall be effective as to the Shares (except
to the extent necessary for the Shares to comply with applicable tax or
securities laws) without Grantee's consent insofar as it may adversely affect
Grantee's rights under this Agreement.
11. Entire Agreement. This Agreement and the Plan set forth the entire agreement
and understanding between the parties as to the subject matter hereof and
supersede all prior oral and written and all contemporaneous oral discussions,
agreements and understandings of any kind or nature.
12. Separability. In the event that any provision of this Agreement is declared
to be illegal, invalid or otherwise unenforceable by a court of competent
jurisdiction, such provision shall be reformed, if possible, to the extent
necessary to render it legal, valid and enforceable, or otherwise deleted, and
the remainder of this Agreement shall not be affected except to the extent
necessary to reform or delete such illegal, invalid or unenforceable provision.
13. Headings. The headings preceding the text of the sections hereof are
inserted solely for convenience of reference, and shall not constitute a part of
this Agreement, nor shall they affect its meaning, construction or effect.
14. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but which together shall constitute
one and the same instrument.
15. Further Assurances. Each party shall cooperate and take such action as may
be reasonably requested by another party in order to carry out the provisions
and purposes of this Agreement.
16. Remedies. In the event of a breach by any party to this Agreement of its
obligations under this Agreement, any party injured by such breach, in addition
to being entitled to exercise all rights granted by law, including recovery of
damages, shall be entitled to specific performance of its rights under this
Agreement. The parties agree that the provisions of this Agreement shall be
specifically enforceable, it being agreed by the parties that the remedy at law,
including monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense in any action for specific
performance that a remedy at law would be adequate is hereby waived.
17. Not An Employment Contract. Nothing in this Agreement or any other
instrument executed pursuant hereto shall confer upon Grantee any right to
continue in the employ of the Company or any Subsidiary or shall affect the
right of the Company or any Subsidiary to terminate the employment of Grantee
with or without Cause.
18. Binding Effect. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective permitted successors and assigns.
IN WITNESS WHEREOF, this Agreement is entered into as of the date first above
written.
HARBORSIDE HEALTHCARE CORPORATION
By:___________________________________________________________
Name:
Title:
GRANTEE
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Name:
Address:_______________________________
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