AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT
AGREEMENT MADE as of September 10, 1997, by and between U.S. Medical
Services of New Jersey, P.C., a New Jersey professional service corporation
(hereinafter called the "Company"), and Xxxxx X. Xxxxxx, M.D., (hereinafter
called "M.D."). M.D. together with any other person or entity which hereafter
may become a shareholder of the Company bound by this Agreement, so long as they
are shareholders of the Company, are sometimes hereinafter collectively called
the "Shareholders" or individually called "Shareholder".
BACKGROUND
M.D. owns one (1) share of the Company's Common Stock, par value $ .10 per
share, currently comprising all of the outstanding shares of the Company's
capital stock (hereinafter, together with any other shares of the Company's
capital stock which hereafter may be owned by Shareholders, called the
"Shares").
M.D. and the Company desire to make certain provisions as hereinafter set
forth relating to the rights of the Shareholders to purchase, transfer, encumber
or otherwise acquire or dispose of the Shares which they may own or may
hereafter acquire and the rights of the Company to permit the transfer of or to
issue Shares.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, conditions and agreements herein contained, the parties hereto, each
intending to be legally bound hereby, agree as follows:
1. Restrictions on Shareholders. No Shareholder shall sell, assign,
transfer, give, bequeath, devise, donate or otherwise dispose of, or pledge,
deposit or otherwise encumber (each a "Transfer"), in any way or manner
whatsoever, whether voluntary or involuntary, any of the Shares now or hereafter
owned (of record or beneficially) by him except as expressly provided in this
Agreement and in accordance with its terms and conditions. Any purported
Transfer made in violation of this Agreement shall be null and void and of no
force or effect and the purported transferee shall not be entitled to any rights
as a holder of shares in respect of or in connection with the shares purportedly
the subject of the Transfer.
2. Shareholder's Limited Right to Dispose of Shares During His or Her
Lifetime. If any Shareholder shall at any time during his or her lifetime desire
to sell all or any part of his or her Shares, such Shareholder (hereinafter
sometimes call the "Selling Shareholder") shall first obtain a written offer
from a Qualified Person (as hereinafter defined) which such Shareholder desires
to accept (hereinafter called the "Offer") to purchase all, but not less than
all, of his or her Shares for a fixed cash price. The Offer shall set forth its
date, the proposed price per share and the other terms and conditions upon which
the purchase is proposed to be made, as well as the name and address of the
proposed purchaser and evidence that the proposed purchaser is a Qualified
Person. The Selling Shareholder shall transmit copies of the Offer to the
Company within 7 days after the Selling Shareholder's receipt of the Offer.
Transmittal of the Offer by the Selling Shareholder shall constitute an offer to
sell all, but not all less than all, of his or her Shares to the Company at the
price and upon the terms set forth in Paragraph 7. For a period of 45 days after
the submission of the Offer to the Company, the Company shall have the option,
exercisable by written notice to the Selling Shareholder with a
copy to each of the other Shareholders, if any, to accept (or designate one or
more Qualified Persons to accept) the Selling Shareholder's offer as to all or
any part of the Selling Shareholder's Shares at the price and upon the terms set
forth in Paragraph 7. If the Company does not accept (or designate a Qualified
Person) to accept the Offer, the Selling Shareholder shall be free to sell such
Shares pursuant to the Offer for a period of 60 days. If the sale does not occur
within such time period, the Selling Shareholder must again comply with the
terms of this paragraph with respect to any sale of Shares. "Qualified Person"
means a person who meets the qualifications for holding shares of the Company's
common stock set forth in the Company's Articles of Incorporation.
3. Legal Proceedings Against Shareholders. The parties agree that the
interests of the Company and its Shareholders would be seriously affected by any
sale or disposition of any Shareholder's Shares by any legal or equitable
proceeding against such Shareholder. Accordingly, it is hereby covenanted and
agreed that in the event of a Proceeding (as hereinafter defined) with respect
to any Shareholder, the Company shall have the option to purchase or designate
one or more Qualified Persons to purchase all, but not less than all, of such
Shareholder's Shares in the same manner as if the Company had received an offer
from the Selling Shareholder pursuant to Paragraph 2 on the date that the
Company receives notice of a Proceeding. The price and terms of purchase
pursuant to the exercise of the option contained in this Paragraph 3 shall be
those set forth in Paragraph 7. A "Proceeding" means that (a) any judgment is
obtained in any legal or equitable proceeding against a Shareholder and the sale
of any of such Shareholder's Shares is contemplated or threatened under legal
process as a result of such judgment, or (b) any execution process is issued
against a Shareholder or the Shares of a Shareholder, or (c) any of the Shares
of a Shareholder are attached, or (d) there is instituted by or against a
Shareholder any other form of legal proceeding or process by which the sale or
transfer of any Shares of such Shareholder becomes imminent (i.e. such Shares
may be sold or transferred either voluntarily or involuntarily within 60 days),
or (e) a Shareholder makes an assignment for the benefit of creditors, or (f) a
Shareholder admits such Shareholder's inability to pay such Shareholder's debts
as they mature, or commences a voluntary case or proceeding under any Bankruptcy
Law (as hereinafter defined), or consents to the entry of an order for relief
against such Shareholder in an involuntary case or proceeding under any
Bankruptcy Law, or consents to the appointment of a Custodian (as hereinafter
defined) for such Shareholder or for all or substantially all of such
Shareholder's property, or (g) a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law (i) for relief against a Shareholder in an
involuntary case or proceeding, (ii) appointing a Custodian for such Shareholder
or for all or substantially all of such Shareholder's property, or (iii)
ordering the liquidation of the Shareholder and the order or decree remains
unstayed and in effect for 60 days. The term "Bankruptcy Law" means Title 11
U.S. Code or any similar federal or state law for the relief of debtors. The
term "Custodian" means any receiver, trustee, liquidator or similar official
under any Bankruptcy Law.
4. Death or Disability of a Shareholder. Upon the death or disability (as
hereinafter defined) of a Shareholder, the Company (or one or more Qualified
Persons designated by the Company) shall purchase from the disabled Shareholder
or the personal representatives of the deceased Shareholder (as the case may
be), and the disabled Shareholder or the personal representatives of the
deceased Shareholder (as the case may be) shall sell to the Company or such
designated Qualified Person(s), all of the deceased or disabled Shareholder's
-2-
Shares at the price and upon the terms set forth in Paragraph 7, and the Company
and the surviving Shareholders, if any, shall adopt such resolutions and take
such action as may be required by law or appropriate to authorize such purchase
at such time. The Company shall notify the disabled Shareholder or the personal
representatives of the deceased Shareholder (as the case may be) within 45 days
following the date of death or disability of the number of Shares that the
Company and/or such Qualified Person(s) will purchase from disabled Shareholder
or the personal representatives of the deceased Shareholder. For purposes of
this Agreement, the term "disability" shall mean the inability of the
Shareholder to perform the duties required by the position pursuant to which the
Shareholder qualifies as a Shareholder in accordance with to the Articles of
Incorporation of the Company, due to partial or total disability or incapacity
resulting from a mental or physical illness, injury, or any other cause for a
period of 12 consecutive weeks, or a cumulative period of 14 weeks during any
twelve-month period.
5. Disqualification of a Shareholder. Upon the Disqualification (as
hereinafter defined) of a Shareholder, the Company (or one or more Qualified
Persons designated by the Company) shall purchase from such Shareholder
(hereinafter called a "Disqualified Shareholder"), and such Disqualified
Shareholder shall sell to the Company or such Qualified Person(s), all of such
Disqualified Shareholder's Shares at the price and upon the terms set forth in
Paragraph 7, and the Company and the remaining Shareholders, if any, shall adopt
such resolutions and take such action as may be required by law or appropriate
to authorize such purchase at such time. The Company shall notify the
Disqualified Shareholder within 45 days following the Company's actual knowledge
of the Disqualification of the number of Shares that the Company and/or such
Qualified Person(s) will purchase from the Disqualified Shareholder. For
purposes of this Agreement, "Disqualification" shall be deemed to have occurred
at such time as such Shareholder no longer meets the qualifications for holding
Shares pursuant to the Articles of Incorporation of the Company, without regard
to the reasons for, or circumstances surrounding, such Disqualification.
6. Removal at Discretion of Company. At any time and from time to time, in
the sole discretion of the Company, as evidenced by the delivery of written
notice to a Shareholder by the Company, the Company (or one or more Qualified
Persons designated by the Company) shall purchase from such Shareholder, and
such Shareholder shall sell to the Company or such Qualified Person(s), all of
such Shareholder's Shares at the price, and upon the terms, set forth in
Paragraph 7, and the Company and the remaining Shareholders, if any, shall adopt
such resolutions and take such action as may be required by law or appropriate
to authorize such purchase at such time.
7. Purchase Price and Terms; Settlement.
(a) Settlement for the purchase of Shares by the Company or by a Qualified
Person pursuant to Xxxxxxxxxx 0, 0, 0, 0 xxx 0 xxxxx xx made within thirty (30)
days following the date of the offer made pursuant to Paragraph 2, or the
occurrence of a Proceeding, death, disability or disqualification of the
Shareholder, or the delivery by the Company of written notice pursuant to
Paragraph 6. The purchase price per Share and the terms of payment shall be (i)
in the case of a purchase pursuant to Paragraph 2, the lesser of the price set
forth on the Offer or Book Value per Share (as hereinafter defined), payable in
twenty (20) successive equal quarterly installments of principal commencing on
the settlement date, together with
-3-
quarterly payments of interest on the unpaid principal balance at the Interest
Rate, or (ii) in the case of a purchase pursuant to Paragraph 3, 4, 5 or 6, $500
payable on the settlement date.
(b) All settlements for the purchase and sale of Shares shall, unless
otherwise agreed to by all of the purchasers and sellers, be held at the
principal executive offices of the Company during regular business hours. The
precise date and hour of settlement shall be fixed by the purchaser or
purchasers (within the time limits allowed by the provisions of this agreement)
by notice in writing to the seller given at least 5 days in advance of the
settlement date specified. In the event that more than one purchaser is involved
in a settlement and the purchasers cannot agree on a precise time of settlement,
the precise time of settlement (within the time limits allowed by the provisions
of this Agreement) shall be fixed by the Chairman of the Company (or if there is
no Chairman, by any Vice Chairman or Vice President of the Company) by five or
more days' written notice to the purchasers and seller.
(c) At settlement, the stock certificate or certificates representing the
Shares being sold shall be delivered by the seller to the purchaser or
purchasers, duly endorsed for transfer or with executed stock powers attached,
with any necessary documentary and transfer tax stamps affixed by the seller.
The seller, if a personal representative of a Shareholder, shall, upon request
of a purchaser, provide prior to the date of settlement evidence reasonably
satisfactory to the purchaser of the seller's legal status as personal
representative of such Shareholder.
(d) Interest payments shall be made on principal payment dates, and shall
be calculated on the declining principal balance based upon a year of 365 days.
(e) Any purchaser may, from time to time, prepay all or a portion of the
unpaid principal balance owing to a seller, without penalty or premium.
Prepayments shall be applied to principal installments in inverse order in which
they are due. Upon any prepayment, the purchaser shall pay accrued interest on
the principal so prepaid to the date of such prepayment.
(f) For purposes of this Agreement, "Interest Rate" with respect to each
interest payment shall mean the minimum rate for payments of interest that is
required pursuant to the Internal Revenue Code of 1986, as amended (the "Code")
(or any successor statute) or regulations thereunder, and/or any provision of an
Act of Congress which does not become part of the Code, in order that (A) there
be adequate stated interest for purposes of Section 1274 of the Code and/or (B)
no part of the principal payments provided hereunder be treated as interest by
virtue of the application of any section of the Code (or any successor statute)
or regulations thereunder, and/or the application of any applicable Act of
Congress which does not become part of the Code; provided, however, that if such
rate exceeds the highest legal rate permitted by applicable law (the "Maximum
Legal Rate") then the Interest Rate shall be reduced to the Maximum Legal Rate.
8. Book Value Defined. The Book Value per Share shall be equal to the book
net worth of the Company (on a consolidated basis with subsidiaries, if any),
less the amount of the liquidation preference of any outstanding preferred stock
of the Company, on the date in question divided by the sum of (i) the number of
shares of Common Stock of the Company outstanding on such date and (ii) the
number of shares of Common Stock of the Company
-4-
issuable upon exercise of outstanding options, warrants or other securities
convertible into shares of Common Stock of the Company. The Book Value per Share
shall be determined as of the close of the Company's fiscal year preceding an
offer described in Paragraph 2, unless such event occurs more than one hundred
days following the close of such fiscal year, in which case the Book Value per
Share shall be determined as of the end of the fiscal quarter preceding the date
such offer was made. The determination of book net worth shall be based solely
on the Company's regularly prepared financial statements, which, in the
Company's discretion, may be internally generated or prepared by a management
company performing services for the Company.
Notwithstanding the foregoing, in the event that the book net worth of the
Company is decreased by reason of the payment of dividends (other than stock
dividends payable in Common Stock), redemption payments or other payments made
on or with respect to the Common Stock or is increased by capital contributions
of the Shareholder whose Shares are to be purchased, subsequent to the date as
of which the Book Value is determined but prior to a settlement pursuant to
Paragraph 7, the Book Value per Share of the Shares as determined pursuant to
Paragraph 8 shall, be decreased to appropriately reflect such decrease in book
net worth, and the aggregate Book Value per Share of such Shareholder's Shares
shall be increased by the amount of such Shareholder's capital contribution, as
though such decrease or increase occurred on the date as of which the Book Value
per Share is determined pursuant to the provisions hereof.
In the event that the outstanding Common Stock shall be subdivided into a
greater or combined into a lesser number of shares, whether by stock dividend,
stock split or combination of shares, subsequent to the date as of which the
Book Value is determined but prior to a settlement pursuant to Paragraph 7, the
Book Value per Share as determined pursuant to the foregoing provisions of this
Paragraph 8 shall, for purposes of Paragraph 7, be proportionately decreased or
increased, as the case may be, and the number of Shares to be sold shall be
adjusted, so as to appropriately reflect such subdivision or combination,
effective immediately upon the effectiveness of such subdivision or combination.
No such adjustment shall be made, however, by reason of the issuance of Common
Stock for cash, property or services, by way of stock options, stock warrants,
subscription rights or otherwise.
Any calculation of Book Value per Share, and any adjustments thereto, for
purposes of this Paragraph 8 shall be made by the Company's regularly engaged
independent public accountants based on the financial statements referred to in
the first paragraph of this Paragraph 8. The determination of Book Value per
Share shall be final, binding and conclusive upon all parties, shall be filed
with the Company, and copies thereof shall be given to all sellers and
purchasers as promptly as practicable but in no event later than ten days prior
to the date of settlement referred to in Paragraph 8.
9. Resignation. If a Shareholder is an officer or director of the Company
at the time: (a) the Company exercises its options to purchase any Shares of
such Shareholder pursuant to Paragraph 2, 3 or 6; (b) such Shareholder becomes
disabled; or (c) such Shareholder becomes a Disqualified Shareholder, then such
Shareholder shall immediately resign as an officer and/or director of the
Company. Such resignation shall be effective at the time the Company exercises
the option, the Shareholder becomes disabled or the Shareholder becomes a
Disqualified Shareholder (as applicable) without the need for such Shareholder
tendering a letter of resignation.
-5-
10. Copy of Agreement to Be Kept on File. The Company shall keep on file at
its principal executive offices, and will exhibit to any Shareholder or his or
her duly authorized representative at any and all reasonable times, an executed
copy of this Agreement and all amendments thereto.
11. Stock Certificates to Be Marked with Legend. All certificates
representing Shares now outstanding or hereafter issued by the Company shall be
marked with the following legend:
"This certificate and the shares represented hereby are held subject
to the terms, covenants and conditions of an agreement dated December
10, 1996 by and among this company and its then shareholders, as it
may be amended from time to time, and neither this certificate, the
shares represented hereby, nor any interest in this certificate or in
such shares may be transferred or disposed of voluntarily, by
operation of law or otherwise, except in accordance with the terms and
provisions thereof. A copy of said agreement and all amendments
thereto is on file and may be inspected at the principal executive
offices of the Company."
The Company shall issue replacement stock certificates without the
foregoing legend to any Shareholder upon request following termination of this
Agreement.
12. Term of Agreement. This Agreement shall terminate on such date as the
Company and its then shareholders agree.
13. Issuance of Shares. Each Shareholder acknowledges that (a) the Board of
Directors may authorize the issuance of capital stock of the Company for any
reason in its sole discretion, including, but not limited to, increasing the
number of shareholders of the Company; (b) such shares of capital stock may be
issued even though the Company does not need additional capital; and, (c) such
issuance(s) may be detrimental to the Shareholders. Each Shareholder hereby
acknowledges that the Company may issue shares of its capital stock to any
Qualified Person designated by the Board of Directors of the Company at a price
and upon terms approved by the Company's Board of Directors, which may be more
advantageous to such Qualified Person than the price and terms set forth in
Paragraph 7.
14. Rights, Obligations and Remedies. The rights and obligations under, and
the remedies to enforce, this Agreement are joint and several as to the Company
and each of its Shareholders with each being completely free to enforce any or
all of the rights or obligations under this Agreement against any of the others
with or without the concurrence or joinder of any of the others. The Shares are
unique, and recognizing that the remedy at law for any breach or threatened
breach by a party hereto of the covenants and agreements set forth in this
Agreement would be inadequate and that any such breach or threatened breach
would cause such immediate and permanent damage as would be irreparable and the
exact amount of which would be impossible to ascertain, the parties hereto agree
that in the event of any breach or threatened breach of any such covenant or
agreement, in addition to any and all other legal and equitable remedies which
may be available, any party hereto may specifically enforce the terms of this
Agreement and may obtain temporary and/or permanent injunctive relief without
the necessity
-6-
of proving actual damage by reason of any breach or threatened breach hereof
and, to the extent permissible under the applicable statutes and rules of
procedure, a temporary injunction may be granted immediately upon the
commencement of any such suit and without notice.
15. Subsequent Shareholders to Become Bound. Any person not an original
signatory hereto who becomes a Shareholder shall be bound by all of the terms
and provisions of this Agreement. Before any person not a party to this
Agreement, including any person to whom transfers of Shares may be made
hereunder, may be entitled to be a shareholder of the Company, such person shall
be required first to execute and deliver to the Company an agreement pursuant to
which such person agrees to be bound by all of the terms and conditions of this
Agreement (as it may have then been amended) thereby becoming a Shareholder, and
the failure of any such person so to do shall preclude such person or entity
from becoming a shareholder of the Company.
16. Entire Agreement: Amendment, Modification and Termination. This
Agreement contains the entire understanding among the parties hereto with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements (including without limitation the Shareholders'
Agreement dated December 10, 1996, between the Company and the Shareholder) and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may be amended, modified or terminated at any time
or times by the unanimous agreement in writing of the Company and its then
Shareholders.
17. Miscellaneous.
(a) Indulgences, Etc. Neither the failure nor any delay on the part of any
party to exercise any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege preclude any other or further exercise of
the same or of any other right, remedy, power or privilege, nor shall any waiver
of any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to
any other occurrence. No waiver shall be effective unless it is in writing and
is signed by the party asserted to have granted such waiver.
(b) Controlling Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations of actions), shall be governed by
and construed in accordance with the laws of the State of New Jersey,
notwithstanding any conflict-of-laws doctrines of such state or any other
jurisdiction to the contrary, and without the aid of any canon, custom or rule
of law requiring construction against the draftsman.
(c) Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made and received only when delivered
(personally, by recognized national or regional courier service, or by other
messenger, for delivery to the intended addressee) against receipt or when
deposited in the United States mails, registered or certified mail, postage
prepaid, return receipt requested, addressed as set forth below:
-7-
(i) If to the Company:
U.S. Medical Services of New Jersey, P.C.
000 Xxxxxxxx Xxxxx
Xxxx Xxxxxxxxxx, X.X. 00000
Attention: Chairman
with a copy given in the manner prescribed above, to:
Xxxxxx X. Xxxxx, Esquire
Cozen and X'Xxxxxx
The Atrium
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
(ii) If to M.D.
Xxxxx X. Xxxxxx, M.D.
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxx Xxxxxx, XX 00000
(iii) if to any other Shareholder, to the most current residence
address of such shareholder reflected in the books and records of the
Company.
In addition, notice by mail shall be by air mail if posted outside of the
continental United States.
Any party may alter the address to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this paragraph for the giving of notice.
(d) Binding Nature of Agreement: No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns, except that no party
may assign or transfer its rights or obligations under this Agreement (except as
otherwise provided in this Agreement), without the prior written consent of the
other parties hereto.
(e) Execution in Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
(f) Provisions Separable. The provisions of this Agreement are independent
of and separable from each other, and no provision shall be affected or rendered
-8-
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.
(g) Paragraph Headings. The paragraph headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
(h) Gender Etc. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context indicates is appropriate.
(i) Number of Days. In computing the number of days for purposes of this
Agreement, all days shall be counted, including Saturdays, Sundays and holidays;
provided, however, that if the final day of any time period falls on a Saturday,
Sunday or holiday on which Federal banks are or may elect to be closed, then the
final day shall be deemed to be the next day which is not a Saturday, Sunday or
such holiday.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
on the date first above written.
Attest: U.S. MEDICAL SERVICES OF NEW JERSEY, P.C.
By: /s/ Xxxxxx X. Xxxxx
------------------------------ -------------------------------------
Secretary Xxxxxx X. Xxxxx, Chairman
(Corporate Seal)
Witness:
By: /s/ Xxxxx X. Xxxxxx, M.D.
------------------------------ -------------------------------------
Xxxxx X. Xxxxxx, M.D.
-9-
