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EXHIBIT 10(y)
VALLEY FORGE DENTAL ASSOCIATES, INC.
c/o Foster Management Company
0000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
December 17, 1996
Xx. Xxxxxx X. Xxxxx
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Dear Xx. Xxxxx:
The undersigned, Valley Forge Dental Associates, Inc., a
Delaware corporation (the "Company"), and you (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 pursuant hereto an aggregate of 150,000 shares (collectively, the
"Shares" and individually, a "Share") of its common stock, $.01 par value (the
"Common Stock"), at a price of $.10 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 his representations and warranties herein contained, at an
aggregate purchase price (the "Purchase Price") of $15,000.00 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
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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 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.
(c) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated herein shall violate any
provision of the Certificate of Incorporation or By-laws of the Company or any
statute, ordinance, regulation, order, judgment or decree of any court or
governmental agency, or conflict with or result in any breach of any of the
terms of, constitute a default under, or result in the termination of or the
creation of any lien pursuant to the terms of, any contract or agreement to
which the Company is a party or by which the Company or any of its assets is
bound.
4. Representations, Warranties, and Agreements of the
Purchaser. The Purchaser hereby represents and warrants to, and agrees with, the
Company as follows:
(a) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated herein shall conflict with or
result in any breach of any of the terms of, constitute a default under, or
result in the termination of or the creation of any lien pursuant to the terms
of, any contract or agreement to which the Purchaser is a party or by which he
or any of his assets is bound.
(b) (i) 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, as amended (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.
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(ii) 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"), he 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.
(iii) As President and Chief Operating Officer of the
Company, 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. The Purchaser
is an "accredited investor" as such term is defined in Rule 501 under the
Securities Act.
(iv) The Purchaser is a sophisticated investor familiar
with the type of risks inherent in the acquisition of 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.
(v) The Purchaser is acquiring the Shares pursuant to this
Agreement for his 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) he 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.
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:
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(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 June 22, 1997............................................ 0%
June 23, 1997 to
June 22, 1998......................................................... 20
June 23, 1998 to
June 22, 1999......................................................... 40
June 23, 1999 to
June 22, 2000......................................................... 60
June 23, 2000 to
June 22, 2001......................................................... 80
On or after June 23, 2001............................................. 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).
(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 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 his 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
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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 20 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 20-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 by the Company.
(iv) If the Company shall fail or decline to
agree to purchase the Offered Securities within the 20-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 20-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) If, as of the Share Closing, any amount of
principal of and interest on any indebtedness of the Purchaser to the Company
shall then be outstanding, payment of the purchase price for the Offered
Securities at the Closing shall be made, at the Company's option, by a credit
against such indebtedness to the extent of the principal thereof and interest
thereon then outstanding (whether or not such principal and interest is then due
and payable).
(vi) 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 (such occurrence, the "Termination Event").
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(c) Termination of the Purchaser's Employment. (i) If the
Purchaser shall cease to serve as an employee of the Company, 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 serve as an employee of the
Company. Such right to purchase shall be exercisable by written notice to that
effect given by the Company to the Purchaser within 60 days after the Purchaser
has ceased to serve as an employee of the Company, 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 60-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 60-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)(iv).
(iii) If at the time of payment of the purchase price
referred to in clause (c)(ii), any amount of principal of or interest on any
indebtedness of the Purchaser to the Company shall be outstanding, payment of
the purchase price for the Unvested Shares shall be made, at the Company's
option, as a credit against such indebtedness to the extent of the principal
thereof and interest thereon then outstanding (whether or not such principal and
interest is then due and payable).
(iv) The per Share purchase price for the Unvested
Shares payable by the Company pursuant to clause (c)(ii) shall be $0.10. The
number of Unvested Shares to be purchased and the per Share purchase price
pursuant to this clause (c)(iv) shall be appropriately adjusted by the Board of
Directors of the Company to reflect any subdivision or combination of the Common
Stock of the Company or any stock dividend or like event.
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(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 his immediate family. For purposes of this Agreement,
the term "immediate family" of the Purchaser shall mean his spouse and children
(and the direct lineal descendants of his 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.
(e) Change in Ownership. If any person or group within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934 (the "1934
Act"), as amended, and the rules and regulations promulgated thereunder, other
than Xxxx X. Xxxxxx, Xxxxxxx X. Xxxx, or a person or group controlled, directly
or indirectly, by Xxxx X. Xxxxxx or Xxxxxxx X. Xxxx, shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act),
directly or indirectly, of securities of the Company (or other securities
convertible into such securities) representing 50% or more of combined voting
power of all securities of the Company entitled to vote in the election of
directors, then any remaining Unvested Shares shall become fully vested,
effective immediately upon such change in ownership.
6. Voting Agreement. (a) Except as hereinafter set forth, the
Purchaser agrees that, subject to the laws of the State of Delaware and the
terms of this Agreement, from the date of this Agreement until December 31, 2001
the Purchaser will vote all shares of Common Stock owned by the Purchaser in
favor of a Board of Directors which shall include Xxxx X. Xxxxxx and such other
persons designated by Xxxx X. Xxxxxx as shall together with Xxxx X. Xxxxxx
constitute a majority of such members.
(b) Notwithstanding any of the other terms or conditions set
forth in this Agreement, the parties hereto agree that the voting agreement set
forth in this Section 6 shall terminate upon the occurrence of the Termination
Event.
7. Come Along/Take Along.
(a) (i) In the event that Abbingdon Venture Partners Limited
Partnership, a Connecticut limited partnership ("Abbingdon-I"), Abbingdon
Venture Partners Limited Partnership-II, a Delaware limited partnership
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("Abbingdon-II"), Abbingdon Venture Partners Limited Partnership-III, a Delaware
limited partnership ("Abbingdon-III"), and Business Development Capital Limited
Partnership-III, a Massachusetts limited partnership ("BDC-III" and together
with Abbingdon-I, Abbingdon-II and Abbingdon-III, the "Partnerships"), propose
to transfer substantially all of the shares of the Common Stock held by them (a
"Sale of Securities") other than to the public for cash pursuant to a
registration statement filed under the Securities Act, then the following
provisions of this Section 7 shall apply.
(ii) The Partnerships shall permit the Purchaser, or
cause the Purchaser to be permitted, to sell the same proportionate number of
shares of the Common Stock held by the Purchaser as the Partnerships shall sell
of the shares of the Common Stock held by the Partnerships, for the same
consideration and otherwise on the same terms and conditions to be received by
the Partnerships in the Sale of Securities.
(iii) The Partnerships shall have the right to request
the Purchaser to sell or cause to be sold the number of shares of the Common
Stock held by the Purchaser which bears the same proportion to the number of
shares of the Common Stock then held by the Purchaser as the number of shares of
the Common Stock being sold by the Partnerships bears to the total number of
shares of the Common Stock owned by the Partnerships (a "Purchaser Request").
(iv) Upon receipt by the Purchaser of a Purchaser
Request, the Purchaser will sell or will cause to be sold the appropriate number
of shares of the Common Stock held by the Purchaser for the consideration and
otherwise on the same terms and conditions received by the Partnerships.
(b) The obligations of the Partnerships under Section 7(a)
hereof to afford the Purchaser, or cause the Purchaser to be afforded, the
rights referred to therein will be discharged if the Purchaser is given written
notice which allows the Purchaser ten business days to exercise such rights (by
written reply addressed to such person as may be designated in the notice, and
if requested in such notice, sent by certified mail, return receipt requested),
and within such ten business day period the Purchaser has not given notice of
exercise of such rights.
(c) All rights and obligations created by this Section 7 shall
terminate upon the earlier to occur of (i) the written agreement of the parties
hereto, or (ii) the Termination Event.
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8. The Closing. As soon as practicable after 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
$15,000.00 in payment of the Purchase Price. Promptly upon receipt of such check
or checks, the Company shall deliver to the Purchaser a stock certificate
registered in the name of the Purchaser and representing the Shares.
9. Conditions to the Obligations of the Purchaser. The
obligations of the Purchaser to purchase the Shares pursuant hereto are subject,
at his option, to the accuracy of the representations and warranties of the
Company contained in Section 3.
10. Conditions to the Obligations of the Company. The
obligations of the Company to sell the Shares pursuant hereto are subject, at
its option, to the accuracy of the representations and warranties of the
Purchaser contained in Section 4.
11. Expenses. Each of the parties hereto shall pay its own
expenses in connection with the preparation, execution and delivery of this
Agreement.
12. 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 his 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.
13. 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.
14. 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.
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15. 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.
16. Integration. This Agreement supersedes all prior
understandings, negotiations, and agreements relating to the subject matter
hereof.
17. 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.
18. Reorganization, Etc. The provisions of this Agreement
shall apply mutatis mutandis 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, to any shares or other securities resulting from any recapitalization,
consolidation, merger or reorganization of the Company and to any shares or
other securities of the Company or any successor company or of any parent of
such successor company which may be received by the Purchaser by virtue of his
ownership of any shares of Common Stock of the Company.
19. Captions. The captions appearing herein are for the
convenience of the parties only and shall not be construed to affect the meaning
of the provisions of this Agreement.
20. Legends on Certificates. During the term of this
Agreement, each of the certificates representing Shares shall contain upon its
face or upon the reverse side thereof legends to the following effect:
"This Certificate represents securities which are restricted
and which are subject to the terms and conditions of a Stock
Purchase Agreement dated December 17, 1996 by and between
Xxxxxx X. Xxxxx and the Company (a copy of which is on file at
the principal office of the Company) and the rights,
privileges and options therein contained. No sale, transfer,
assignment, pledge, hypothecation or other disposition of this
Certificate or any of the securities represented hereby
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shall be made except in compliance with the terms and
conditions of said Stock Purchase Agreement.
The Shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), and may not be transferred in violation of such Act."
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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,
VALLEY FORGE DENTAL ASSOCIATES, INC.
By /s/ W. Xxxx Xxxxxxx
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Accepted and agreed to as
aforesaid:
/s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx
The undersigned are executing this
Agreement to indicate their agreement to
Section 7 hereof:
ABBINGDON VENTURE PARTNERS
LIMITED PARTNERSHIP
By: BDC-III Partners, general
partner
By /s/ Xxxxxxx X. Xxxx
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ABBINGDON VENTURE PARTNERS
LIMITED PARTNERSHIP-II
By: Abbingdon-II Partners, general
partner
By /s/ Xxxxxxx X. Xxxx
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ABBINGDON VENTURE PARTNERS
LIMITED PARTNERSHIP-III
By: Abbingdon-II Partners, general
partner
By /s/ Xxxxxxx X. Xxxx
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BUSINESS DEVELOPMENT CAPITAL
LIMITED PARTNERSHIP-III
By: BDC-III Partners, general partner
By /s/ Xxxxxxx X. Xxxx
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