EXECUTION COPY
RESTRICTED STOCK AGREEMENT
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THIS RESTRICTED STOCK AGREEMENT (the "Agreement") is entered into as
of December 23, 1996, effective as of November 1, 1996, by and between BONE,
MUSCLE AND JOINT, INC., a Delaware corporation (the "Company"), and the
individual identified on the signature page hereof (the "Stockholder"), with
reference to the following facts. Certain capitalized terms used herein are
defined in paragraph 5 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") by and between the Company and South Texas
Spinal Clinic, P.A. (the "Medical Group").
B. This Agreement also is entered into concurrently with substantially
identical Restricted Stock Agreements between the Company and the other partners
in or employees of the Medical Group identified in Schedule A attached hereto
(collectively, 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 Stock.
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(a) Upon execution of this Agreement, the Company shall issue to
the Stockholder the number of shares specified opposite the Stockholder's name
in Schedule A attached hereto (the "Restricted Stock") of the common stock of
the Company, par value $0.001 per share (the "Common Stock"), pursuant to
Section 4 and Schedule III of the Management Services Agreement. All of such
shares of Common Stock issued to the Stockholder are referred to herein as
"Restricted Stock." Simultaneously with the execution and delivery hereof, the
Company is delivering to the Stockholder the certificates representing the
Common Stock referred to in this paragraph 1(a).
(b) In connection with the issuance of the Restricted Stock
hereunder, the Stockholder represents and warrants to the Company that:
(i) the Restricted Stock 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 Stock 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 Stock;
(iii) the Stockholder has no need for liquidity in his or
her investment in the Restricted Stock and is able to bear the economic risk of
his or her investment in the Restricted Stock for an indefinite period of time
and understands that the Restricted Stock has not been registered or qualified
under the 1933 Act or any applicable state securities laws, by reason of the
issuance of the Restricted Stock 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;
(vi) and the Stockholder has had an opportunity to ask
questions and receive answers concerning the terms and conditions of the
offering of the Restricted Stock and has had full access to or been provided
with such other information concerning the Company as he or she has requested.
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(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 Stock
to the Stockholder and as a condition thereto, the Stockholder acknowledges and
agrees that:
(i) neither the issuance of the Restricted Stock to the
Stockholder nor any provision contained herein shall affect the right of the
Company to terminate the Management Services Agreement;
(ii) and the Company shall provide the Stockholder with
substantially the same information regarding the Company that the Company
regularly discloses to its other stockholders.
2. Vesting of the Restricted Stock.
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(a) Except as otherwise provided in paragraphs 2(b) and 2(c)
hereof, the Restricted Stock 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(d) below) by the Stockholder, or (iii) the
Stockholder has not died or become permanently disabled:
Anniversary Date Cumulative Percentage of
of this Agreement Restricted Stock Vested
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First 25%
Second 50%
Third 75%
Fourth 100%
For purposes of this Agreement, "Anniversary Date of this Agreement" means
November 1 of each year after 1996. Shares of the Restricted Stock which have
become vested are referred to herein as "Vested Shares" and all other shares of
the Restricted Stock are referred to herein as "Unvested Shares."
(b) (i) The provisions of paragraph (ii) below shall be applicable
only in the event that the Company has not amended that certain Restricted Stock
Agreement entered into by and between the Company and Lehigh Valley Bone, Muscle
and Joint Group, L.L.C., a Pennsylvania limited liability company ("Lehigh
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Valley"), on or about July 1, 1996, to delete that provision in such agreement
which is substantially similar to paragraph (ii) below. If such agreement is so
amended, paragraph (ii) below shall become null and void upon the Company's
provision of notice thereof to the Medical Group, and the Restricted Stock shall
become vested only in annual increments as provided in paragraph 2(a) above.
(ii) If the Management Services Agreement is terminated or
there is a Cessation of Active Practice by the Stockholder, or if the
Stockholder dies or becomes permanently disabled, on any date other than an
anniversary date of the issuance of the Restricted Stock, the cumulative
percentage of the Restricted Stock to become vested shall be determined on a pro
rata basis according to the number of days elapsed since the prior anniversary
date or the date of this Agreement (should such termination occur prior to the
first anniversary date).
(c) Notwithstanding the foregoing, in the event of the death of the
Stockholder, in addition to any shares that have vested in accordance with
paragraphs 2(a) and 2(b) above, the number of Unvested Shares scheduled to
become Vested Shares pursuant to paragraph 2(a) above during the eighteen-month
period immediately following the date of death shall immediately become Vested
Shares.
(d) For purposes of this Agreement, "Cessation of Active Practice"
means a physician Stockholder's failure (other than by reason of death or
permanent disability), throughout any twelve-month period ending on the day
before any of the vesting dates described in paragraph 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
▇▇▇▇▇▇▇▇ that were less than seventy-five percent (75%) of the amount of
▇▇▇▇▇▇▇▇ generated by the Stockholder during the twelve-month period immediately
preceding the date hereof.
(e) If the Stockholder is insured under a disability insurance
policy, the 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 Agreement. 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
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Group, subject to the approval of the Company, which approval shall not be
unreasonably withheld.
3. Repurchase of Restricted Stock.
(a) Except as provided in paragraph 3(g), in the event of a
Repurchase Event, as defined in paragraph 3(b) below, the Company may elect to
repurchase 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 paragraph 3 (the
"Repurchase Option").
(b) Each of the following shall constitute a "Repurchase Event":
(i) Termination of the Management Services Agreement for any
reason whatsoever on or before the fourth anniversary of the date of this
Agreement;
(ii) Termination of the Management Services Agreement by the
Medical Group pursuant to Section 13.1(d) thereof (based on failure of the
Company to consummate an initial public offering of its Common Stock within
forty-eight (48) months after the Commencement Date under the Management
Services Agreement); or
(iii) The Stockholder's Cessation of Active Practice.
(c) The repurchase price for each Unvested Share shall be equal to
the Original Value of such share.
(d) The repurchase price for each Vested Share shall be the Fair
Market Value for such share.
(e) The Company may elect to repurchase all or a portion of the
Restricted Stock 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 Stock, the Company shall repurchase all of the Unvested Shares and
may purchase that number of Vested Shares as the Company may, in its discretion,
determine. The Repurchase Notice shall set forth the number of Unvested Shares
and Vested Shares to be acquired, the aggregate consideration to be paid for
such shares, and the time and place for the closing of the transaction. If the
Repurchase Event giving rise to the Company's election to repurchase consists of
the termination of the Management Services Agreement, and if the number of
shares of Restricted Stock that the Company has elected to repurchase is less
than the total number of shares of Restricted Stock held by all of the
Stockholders, the Company shall purchase the
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shares of Restricted Stock 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 share).
(f) The closing of the repurchase of Restricted Stock 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 Stock to be purchased pursuant to the Repurchase Option
by delivery of (i) the Company's check or wire transfer of funds, (ii)
subordinated note or notes payable in up to five equal annual installments
beginning on the first anniversary of the closing of such purchase and bearing
interest (payable quarterly) at a rate per annum equal to the greater of either
the prime rate announced from time to time by The Chase Manhattan Bank (National
Association) plus 1/2% or the "applicable Federal rate" (as defined in Section
1274(d) of the Internal Revenue Code) in effect from time to time, or (iii) both
(i) and (ii), in the aggregate amount of the repurchase price for such 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 the Management Services Agreement, the total of such
sums may be offset by the Company against any amounts owed by the Company to the
Stockholders pursuant to each of the Restricted Stock Agreements, such offset
amount to be allocated pro rata among all of the Stockholders. Any notes issued
by the Company pursuant to this paragraph 3(f) shall be subject to the
restrictive covenants, if any, to which the Company is subject at the time of
such repurchase. 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 (A) the Stockholder's power, authority and legal
capacity to enter into such sale and transfer valid right, title and interest in
such Restricted Stock, (B) the Stockholder's ownership of such Restricted Stock
and the absence of any liens, pledges, and other encumbrances on such Restricted
Stock and (C) 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.
(g) Notwithstanding anything to the contrary set forth in this
paragraph 3, in the event of a Repurchase Event consisting of the termination of
the Management Services Agreement by the Medical Group pursuant to Section 13.1
of the Management Services Agreement, or in the event of termination of the
Management Services Agreement by either party in accordance with Section 28
thereof (pursuant to Section 13.3), the Company shall have the obligation
(rather than the option) to purchase all of the Restricted Stock acquired by the
Stockholder pursuant to this Agreement, and the repurchase price shall be paid
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in full in cash not later than sixty (60) days after the date of termination of
the Management Services Agreement; 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 the Management Services
Agreement, the total of such sums may be offset by the Company against any
amounts owed by the Company to the Stockholders pursuant to each of the
Restricted Stock Agreements, such offset amount to be allocated pro rata among
all of the Stockholders.
(h) In the event of the death or permanent disability of the
Stockholder, the Company shall repurchase all of the Unvested Shares (but not
the Vested Shares) of the Stockholder. 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 death or the date on which such disability is determined to be
permanent.
(i) 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 Stock 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 paragraph
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 paragraph 3(i), 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.
(j) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Restricted Stock by the Company shall be subject
to applicable restrictions, if any, contained in Federal law or in the Delaware
General Corporation Law. Notwithstanding anything to the contrary contained in
this Agreement, if any such restrictions prohibit or otherwise delay the
repurchase of Restricted Stock 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 such restrictions.
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(k) In the event that Restricted Stock is repurchased pursuant to
this paragraph 3, the Stockholder and his or her successors and assigns shall
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.
4. Return of Stock Upon Recission/Disengagement.
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(a) In the event that as of the second anniversary of the
Commencement Date (as defined in the Management Services Agreement) (i) the
Management Services Agreement is rescinded by the Medical Group or the Medical
Group disengages itself from further participation in and from its obligations
under the terms of the Management Services Agreement pursuant to Section 14.1
thereof, or (ii) the Stockholder disengages from further participation in and
from his obligations under the terms and provisions of the Management Services
Agreement pursuant to Section 14.2 thereof or (iii) the Medical Group elects to
rescind and terminate the Management Services Agreement pursuant to Section 14.3
thereof, the Stockholder shall immediately deliver to the Company all Restricted
Stock issued by the Company to the Stockholder pursuant to this Agreement
together with duly executed stock powers without any compensation payable by the
Company to the Stockholder therefor and/or, if all or part of such shares of
Restricted Stock have previously been disposed of by the Stockholder, the
Stockholder shall pay to the Company in cash, by cashier's or certified check or
by wire transfer of immediately available funds to an account designated by the
Company the Fair Market Value of such shares previously disposed of by the
Stockholder to be determined on the second anniversary of the Commencement Date.
(b) In the event that as of the seventh anniversary of the
Commencement Date (i) the Management Services Agreement is rescinded by the
Medical Group or the Medical Group disengages itself from further participation
in and from its obligations under the terms of the Management Services Agreement
pursuant to Section 14.1 thereof or (ii) the Stockholder disengages from further
participation in and from his obligations under the terms and provisions of the
Management Services Agreement pursuant to Section 14.2 thereof, the Stockholder
shall immediately deliver to the Company fifty percent (50%) of the Restricted
Stock issued by the Company to the Stockholder pursuant to this Agreement
together with duly executed stock powers without any compensation payable by the
Company to the Stockholder therefor and/or, if all or part of such shares of
Restricted Stock have previously been disposed of by the Stockholder, the
Stockholder shall pay to the Company in cash, by cashier's or certified check or
by wire transfer of immediately available funds to an account designated by the
Company the Fair Market Value of such shares previously disposed
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of by the Stockholder to be determined on the seventh anniversary of the
Commencement Date.
(c) If the Stockholder is required hereunder to deliver fewer
shares than is represented by the stock certificate actually delivered to the
Company by the Stockholder, the Company shall promptly deliver to the
Stockholder a new stock certificate representing the number of shares not
required to be returned and delivered to the Company hereunder, without any
further consideration.
5. Transfer Restriction; Legend.
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(a) Except as otherwise expressly provided in paragraph 3, the
Stockholder shall sell or transfer or agree to sell or transfer ("Sale" or
"Sell") Restricted Stock only in accordance with the following procedures;
provided, however, that with respect to this paragraph 5(a), Restricted Stock,
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; provided, further, that the
restrictions on transfers of Vested Shares set forth in this paragraph 5 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:
(b) In the event that the Stockholder receives a bona fide offer
from a third party (the "Prospective Stockholder") to purchase all or any
portion of the Restricted Stock 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 Stock
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 Stock 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.
(c) Sales of Restricted Stock under the terms of paragraph 5(b)
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 Stock duly endorsed
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for transfer shall be made on such date against payment of the purchase price
therefor.
(d) If the Company fails to purchase the Restricted Stock 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 Restricted Stock so offered for Sale on terms no more
favorable than the terms stated in the Offer Notice; provided, however, that the
Stockholder shall not, under any circumstances, Sell any Restricted Stock 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
Prospective Stockholder's ownership of Restricted Stock would be contrary to the
best interests of the Company. In the event that the Restricted Stock is not
Sold by the Stockholder to the Prospective Stockholder during such period, the
right of the Stockholder to Sell such remaining Restricted Stock to the
Prospective Stockholder shall expire and the obligations of the Stockholder
pursuant to this paragraph 5 shall be reinstated.
(e) Any transferee of Restricted Stock (other than the Company)
shall, as a condition to such transfer, agree to be bound by all of the
provisions of this Agreement applicable to the Stockholder.
(f) The certificates representing the Restricted Stock will bear
the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS
SET FORTH IN A RESTRICTED STOCK AGREEMENT DATED AS OF
DECEMBER 23, 1996 EFFECTIVE AS OF NOVEMBER 1, 1996, 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."
(g) ▇▇▇▇▇▇ ▇▇▇▇▇▇, M.D. and any venture capital firm providing
funds to the Company ("Selling Shareholders") shall give to the Stockholder the
right to participate on a pro rata basis (based on the number of shares owned,
whether preferred or common, held by the Stockholders and by any other
shareholders who hold the same rights that are conferred by this paragraph 5(g),
including members of other physician groups), in any proposed sale of stock
(whether preferred or common) in the Company from any of the Selling
Shareholders to any unaffiliated third party, and the Company shall require the
Selling Shareholders to comply with the obligations set forth in this paragraph
5(g); provided, however, that the obligation under
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this paragraph 5(g) shall become null and void upon the consummation of an
initial public offering of the Company's Common Stock pursuant to the ▇▇▇▇ ▇▇▇.
(h) The Stockholder hereby agrees to the provisions of Section 9.12
of the Management Services Agreement (relating to the right of ▇▇▇▇▇▇ ▇▇▇▇▇▇,
M.D. and any venture capital firm providing funds to the Company to participate
in certain sales of stock by the Stockholder).
6. Definitions.
-----------
(a) "Affiliate" means, with respect to any Person, any of (a) a
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, another 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 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 qualified firm of national
or regional reputation, retained jointly by the Company and the Stockholder, 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 Stockholder. 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:
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First, the Stockholder shall send a list of names 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 a list
to the Company within such time period, the Company may, within the next
seven (7) days following expiration of such earlier seven-day period,
submit a list of names 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 agreed to by 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 Ten Cents $0.10 (as proportionately adjusted for all
subsequent stock splits, stock dividends and other recapitalizations).
(e) "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.
(f) "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.
(g) "Restricted Stock" has the meaning set forth in paragraph 1(a).
The Restricted Stock will continue to be Restricted Stock 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 Stock will succeed to all rights and
obligations attributable to the Stockholder as the holder of the Restricted
Stock hereunder. The Restricted Stock will also include shares of the Company's
capital stock issued
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with respect to the Restricted Stock by way of a stock split, stock dividend or
other recapitalization.
(h) "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.
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(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.
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(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) (a "Transfer") or
attempted Transfer of any Restricted Stock 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 transferee of such Restricted Stock as the owner of
such stock for any purpose.
(b) 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 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
- 13 -
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.
(c) 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.
(d) 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.
(e) 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, assigns, heirs,
representatives and estate, as the case may be (including subsequent holders of
Restricted Stock); provided that the rights and obligations of the Stockholder
under this Agreement shall not be assignable except in connection with a
permitted transfer of Restricted Stock hereunder.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without giving
effect to any choice of law or conflicting provision or rule (whether of the
State of Texas or any other jurisdiction), that would cause the laws of any
jurisdiction other than the State of Texas to be applied. In furtherance of the
foregoing, the internal law of the State of Texas 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.
(g) Jurisdiction.
(i) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any Texas state court or Federal court
of the United States of America sitting in the State of Texas 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 Texas state court or, to the extent permitted by law, in such
Federal court. Each of the
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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 Texas state or Federal
court in Bexar County. 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.
(h) 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 any breach of the provisions of this Agreement and that any
party may in its sole discretion 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.
(i) 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.
(j) 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 reputable 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 after deposit in the U.S. mail and one business day after deposit with
a reputable overnight courier service.
- 15 -
If to the Company, to:
Bone, Muscle and Joint, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, M.D., President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Held, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Stockholder, to:
[Name of Stockholder]
South Texas Spinal Clinic, P.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
South Texas Spinal Clinic, P.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
Law Offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
NationsBank Plaza
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(k) 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 Texas, the time period for giving notice or taking action shall be
automatically extended to the business day immediately following such Saturday,
Sunday or holiday.
- 16 -
(l) 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.
(m) Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
(n) 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 it 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.
(o) Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice-versa.
* * *
- 17 -
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:__________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇, M.D.,
President and Chief
Executive Officer
STOCKHOLDER
-----------
---------------------------
Signature
---------------------------
Printed Name
ACCEPTED AND AGREED
AS TO SECTION 5(g)
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇, M.D.
▇▇▇▇▇▇ ▇▇▇▇▇▇, M.D.
DELPHI VENTURES III, L.P.
By: DELPHI MANAGEMENT PARTNERS
III, L.L.C., its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Managing Member
DELPHI BIOINVESTMENTS III, L.P.
By: DELPHI MANAGEMENT PARTNERS
III, L.L.C., its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Managing Member
OAK INVESTMENT PARTNERS VI, LIMITED
PARTNERSHIP
By: OAK ASSOCIATES VI, LIMITED
PARTNERSHIP, its General Partner
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇, Managing Member
OAK VI AFFILIATES FUND,
LIMITED PARTNERSHIP
By: OAK VI AFFILIATES, LLC,
its General Partner
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇, Managing Member
Schedule A
----------
Stockholder # Shares
Stock
----------- --------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D. 285,402
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D. 125,097
M. ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. 145,247
▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D. 212,511
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D. 173,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, D.O. 135,244
