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EXHIBIT 10(i)
NOVACARE EMPLOYEE SERVICES, INC.
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
May 1, 0000
Xx. Xxxxx X. XxXxxx
00 Xxxxxx Xxxx
Xxxx Xxxxxxxx, XX 00000
Dear Xxxxx:
The undersigned, NovaCare Employee Services, Inc., a Delaware
Corporation (the "Company"), and Xxxxx X. XxXxxx (the "Purchaser"), hereby agree
as follows:
1. Authorization and Sale of the Shares. The Company has
authorized the issuance to the Purchaser of and proposes to sell to the
Purchaser, as an employee benefit and as an incentive to the Purchaser 10,000
shares (collectively the "Shares" and individually a "Share") of its common
stock, $.01 par value (the "Common Stock"), at a price of $2.80 per Share.
2. Purchase of the Shares by the Purchaser. Subject to the terms
and conditions hereof, the Purchaser hereby agrees to purchase the Shares from
the Company in reliance upon its representations and warranties herein
contained, and the Company hereby agrees to sell the Shares to the Purchaser in
reliance upon the Purchaser's representations and warranties herein contained,
at an aggregate purchase price (the "Purchase Price") of $28,000 in cash.
3. Representations, Warranties, and Agreements of the Company.
The Company represents and warrants to, and agrees with, the Purchaser as
follows:
(a) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware.
(b) The Company has duly authorized the execution and delivery
of this Agreement and the issuance and delivery of the Shares and this Agreement
constitutes a valid and legally binding agreement of the Company enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, or other laws affecting generally the enforceability of
creditors' rights and by limitations on the availability of equitable remedies.
The Shares, when issued and
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delivered in accordance with this Agreement, shall have been duly issued and
shall be validly outstanding, fully paid and nonassessable shares of the Common
Stock.
4. Representations, Warranties, and Agreements of the Purchaser.
The Purchaser hereby represents and warrants to, and agrees with, the Company as
follows:
(a) The Purchaser understands that by the terms of this
Agreement he is purchasing shares of Common Stock issued and delivered by the
Company without compliance with the registration requirements of the Securities
Act of 1933 (the "Securities Act") or the securities laws of any state, under
and in reliance on exemptions from the registration requirements of the
Securities Act and such laws, and without the approval, disapproval, or passing
on the merits by any regulatory authority; that for purposes of such exemptions,
the Company will rely upon the representations, warranties and agreements of the
Purchaser contained herein; and that such non-compliance with registration
requirements is not permissible unless such representations and warranties are
correct and such agreements performed. The Purchaser is an "accredited investor"
as such term is defined in Rule 501 under the Securities Act.
(b) The Purchaser understands that the Company is under no
obligation to effect a registration under the Securities Act of the Shares to be
purchased by him hereunder. The Purchaser understands that, under existing rules
of the Securities and Exchange Commission (the "Commission"), the Purchaser may
be unable to sell any of the Shares except to the extent that the Shares may be
sold (A) in a bona fide private placement to a purchaser who shall be subject to
the same restrictions on sale or (B) subject to the restrictions contained in
Rule 144 under the Securities Act.
(c) The Purchaser is acquiring the Shares pursuant to this
Agreement for the Purchaser's own account and not with a view to or for sale in
connection with the distribution thereof within the meaning of the Securities
Act. The Purchaser shall not effect a distribution of any Shares until either
(A) the Purchaser has received the opinion of counsel for the Company that
registration under the Securities Act is not required or (B) a registration
statement under the Securities Act covering such Shares and the disposition
thereof has become effective under the Securities Act, and the Purchaser agrees
that the certificates evidencing the Shares may bear a restrictive legend to the
foregoing effect.
(d) As President of the Company's parent NovaCare, Inc., the
Purchaser is fully familiar with the business, properties and financial
condition of the Company, and acknowledges that he has been afforded access to
such additional information concerning the Company as he considers necessary or
appropriate to make an informed investment decision, and to all additional
information which has considered necessary to verify the accuracy of the
information so received. The Purchaser has had the opportunity to ask questions
of and receive answers from the Company concerning the terms and conditions of
the transactions contemplated by this Agreement
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(e) The Purchaser is a sophisticated investor familiar with
the type of risks inherent in the acquisition of restricted securities such as
the Common Stock and his financial position is such that he can afford to retain
the Shares for an indefinite period of time without realizing any direct or
indirect cash return on his investment.
(f) The Purchaser is familiar with the provisions of Rule 144
and the limitations upon the availability and applicability of such rule.
5. Restrictions on Transferability of the Shares. The Purchaser
hereby agrees that the Purchaser shall not sell, assign, transfer, gift, devise,
bequeath, deliver, pledge, hypothecate or otherwise dispose of any of the
Shares, except as provided for in this Agreement. Any disposition or purported
disposition of Shares in violation of this Agreement shall be null and void and
shall not be recorded on the books of the Company. Notwithstanding the
foregoing:
(a) Disposition of Vested Shares and Shares Which Are Not
Vested Shares. Shares which are "vested" in accordance with the following
schedule (the "Vested Shares") may be disposed of in the manner set forth in
Subsection (b) or (d) of this Section 5.
Cumulative Percentage of
Shares Which Are Vested Shares
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On or before April 30, 1998 ................ 0%
May 1, 1998 to
April 30, 1999.............................. 33-1/3%
May 1, 1999 to
April 30, 2000.............................. 66-2/3%
On or after May 1, 2000 .................... 100%
Shares which are not Vested Shares (the "Unvested Shares") may be
disposed of only in the manner set forth in Subsection (c) or (d) of this
Section 5.
(b) Vested Shares.
(i) Vested Shares held by the Purchaser may be transferred
by the Purchaser provided that the Purchaser first complies with the right to
purchase set forth in this Subsection (b). The Company shall have a right to
purchase any Vested Shares proposed to be sold by the Purchaser on the terms set
forth in this Subsection (b).
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(ii) If the Purchaser wishes to dispose of Vested Shares,
the Purchaser shall first obtain a bona fide written offer (the "Offer") for the
purchase of the Vested Shares which he or she wishes to dispose of. Such Offer
shall be for cash or promissory notes only. Promptly upon receipt of the Offer,
the Purchaser shall give notice to the Company (the "Offer Notice") of the
Purchaser's intent to dispose of Vested Shares, which Offer Notice shall specify
the name of the proposed purchaser, the number of Vested Shares (the "Offered
Securities") the Purchaser desires to dispose of and the price and terms of
payment of such proposed disposition. Upon receipt of the Offer Notice, the
Company shall have the right to purchase all (but not less than all) of the
Offered Securities at the price and on the terms of the Offer. Such right must
be exercised by the Company by giving notice to that effect to the Purchaser
within a period of ten business days after the date of receipt of the Offer
Notice (any such notice of the exercise of such right being herein referred to
as an "Acceptance Notice").
(iii) In the event of the exercise by the Company of its
right to purchase pursuant to this Subsection (b), the Acceptance Notice shall
specify the time and date for purchase of the Offered Securities (the "Share
closing") which shall be not more than 30 days after the expiration of the ten
business day period set forth in clause (b)(ii). The Purchaser shall deliver to
the Company at the Share closing, which shall be held at the business
headquarters of the Company, the Offered Securities in due and proper form for
transfer, against payment of the purchase price of the Company.
(iv) If the Company shall fail or decline to agree to
purchase the Offered Securities within the ten business day period provided for
in clause (b)(ii), then the Purchaser shall have the right and privilege to sell
all (but not less than all) the Offered Securities, within 60 days after the
expiration of such ten business day period, to the bona fide purchaser named in
the Offer Notice, at the price and on terms of payment specified in the Offer.
If, for any reason, the Offered Securities are not sold within such 60-day
period, the Offered Securities shall again become subject to the terms and
conditions of this Agreement.
(v) The Company's right to purchase set forth in this
Subsection (b) shall terminate upon the occurrence of the closing of the initial
sale by the Company to the public of shares of the Common Stock pursuant to a
registration statement filed under the Securities Act (other than a registration
statement covering securities of the Company to be issued pursuant to an
employee benefit plan).
(c) Termination of the Purchaser's Employment.
(i) If the Purchaser shall cease to be employed by the
Company's parent or any other subsidiary or affiliate of the Company's parent
(collectively, the "Company Group"), for any reason whatsoever, the Company
shall have the right (but not the obligation) to purchase from the Purchaser all
or any portion of the Unvested Shares owned by the Purchaser at the time the
Purchaser ceases to be employed by the Company, provided that Shares that become
vested before or upon such
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termination of Purchaser's employment pursuant to any provision of the
Employment Agreement providing for acceleration of vesting upon the occurrence
of certain events shall be deemed vested for purposes of this Agreement. Such
right to purchase shall be exercisable by written notice to that effect given by
the Company to the Purchaser within 30 days after the Purchaser has ceased to be
employed by any member of the Company Group, as aforesaid. Upon the giving of
such written notice, the Purchaser shall for all purposes cease to be a
stockholder of the Company as to the Unvested Shares covered by such notice and
shall have no rights against the Company or any other person in respect of such
Unvested Shares except the right to receive payment for such Unvested Shares in
accordance herewith. Notwithstanding the provisions of Subsection (a) of this
Section 5, Unvested Shares not so purchased by the Company shall upon the
expiration of such 30-day period become Vested Shares.
(ii) At the time and date specified in the notice given by
the Company referred to in clause (c)(i), which date shall in no event be more
than 15 days after the expiration of the 30-day period for the exercise of the
right to purchase set forth therein, the Purchaser shall deliver to the Company,
at the business headquarters of the Company, the Unvested Shares to be sold by
the Purchaser in due and proper form for transfer, against payment by the
Company of the purchase price therefor, as determined in accordance with clause
(c)(iii).
(iii) The per Share purchase price for the Unvested Shares
payable by the Company pursuant to clause (c)(ii) shall be $2.80. The number of
Unvested Shares to be purchased and the per Share purchase price pursuant to
this clause (c)(iii) shall be appropriately adjusted by the Board of Directors
of the Company to reflect any split, reverse split, recapitalization,
reorganization, merger, stock dividend, consolidation or other change in the
corporate structure or the stock of the Company
(d) Disposition to Family Members. Shares held by the
Purchaser may be transferred by the Purchaser to or for the benefit of the
Purchaser or a member of the Purchaser's immediate family. For the purpose of
this Agreement, the term "immediate family" of the Purchaser shall mean the
Purchaser's spouse and children (and the direct lineal descendants of the
Purchaser's children). It shall be a condition to the validity of any transfer
of Shares permitted by the provisions of this Subsection (d) that the transferee
shall execute a copy of this Agreement, shall hold such Shares subject to the
provisions of this Agreement, and shall make no further transfer of such Shares,
except in compliance with the terms and conditions of this Agreement.
6. The Closing. Simultaneously with the execution and delivery of
this Agreement, the Purchaser shall cause to be delivered to the Company a check
or checks payable to the order of the Company in the amount of the Purchase
Price. Promptly after receipt of such check or checks, the Company shall deliver
to the Purchaser at the Purchaser's address set forth at the head of this
Agreement, a stock certificate registered in the name of the Purchaser and
representing the Shares.
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7. Notice. Any notice under this Agreement shall be in writing
and delivered personally or sent by certified mail, return receipt requested,
addressed, as the case may be, (i) to the Company at its address set forth at
the head of this Agreement or such other address as may hereafter be designated
by the Company by notice to the Purchaser in the manner provided herein; and
(ii) to the Purchaser at the Purchaser's address set forth at the head of this
Agreement or such other address as may hereafter be designated by the Purchaser
by notice to the Company in the manner provided herein. All notices personally
delivered shall be deemed to have been given when delivered and all notices sent
by mail shall be deemed to have been given three business days after mailing.
8. Successors. The terms, covenants and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective heirs, legal representatives, successors, permitted
transferees and assigns.
9. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
applicable to agreements made and to be performed entirely within such
Commonwealth.
10. Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto, and no modifications of or amendments to
this Agreement shall be binding on the parties hereto unless in writing and
signed by them.
11. Integration. This Agreement supersedes all prior
understandings, negotiations, and agreements relating to the subject matter
hereof.
12. Severability. If any provision herein contained shall be held
to be illegal or unenforceable, such holding shall not affect the validity or
enforceability of the other provisions of this Agreement.
13. Reorganization, Etc. The provisions of this Agreement shall
apply mutatis mutandi to any shares or other securities resulting from any stock
split or reverse split, stock dividend, reclassification, subdivision,
consolidation or reorganization of any shares or other securities of the Company
and to any shares or other securities of the Company or of any successor company
which may be received by the Purchaser by virtue of his or her ownership of the
Shares.
14. Disputes.
(a) Arbitration. The parties shall attempt amicably to resolve
disagreements by negotiating with each other. In the event that the matter is
not amicably resolved through negotiation, any controversy, dispute or
disagreement arising out of or relating to this Agreement (a "Controversy")
shall be settled exclusively by binding arbitration, which shall be conducted by
a single arbitrator in Philadelphia, PA, in accordance with the
J-A-M-S/Endispute Streamlined Arbitration Rules and Procedures (the "Rules").
The parties agree that, notwithstanding anything to the contrary contained
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in the Rules, the arbitrator shall not award consequential, exemplary,
incidental, punitive or special damages.
(b) Procedure. It is agreed that if any party shall desire
relief of any nature whatsoever from the other party as a result of any
Controversy, such party will initiate such arbitration proceedings within a
reasonable time, but in no event more than one (1) year after the facts
underlying said Controversy first arise or become known to the party seeking
relief (whichever is later). The failure of such party to institute such
proceedings within said period shall be deemed a full waiver of any claim for
such relief. The parties shall bear equally all costs of said arbitration (other
than their own attorney's fees and costs). The parties agree that the decision
and award of the Arbitrator shall be final and conclusive upon the parties, in
lieu of all other legal, equitable or judicial proceedings between them, and
that no appeal or judicial review of the award or decision of the Arbitrator
shall be taken, but that such award or decision may be entered as a judgment and
enforced in any court having jurisdiction over the party against whom
enforcement is sought.
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If you are in agreement with the foregoing, please execute and
deliver to the undersigned the enclosed counterpart of this Agreement, whereupon
this Agreement shall become a binding agreement between us.
Very truly yours,
NOVACARE EMPLOYEE
SERVICES, INC.
By /s/ Xxxxx Xxxxxx
___________________________
Accepted and agreed to as
aforesaid:
/s/ Xxxxx X. XxXxxx
_______________________________
Xxxxx X. XxXxxx
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