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EXHIBIT 10.18
RESTRICTED STOCK AGREEMENT
UNDER THE MONARCH DENTAL CORPORATION
1996 STOCK OPTION AND INCENTIVE PLAN
NAME OF GRANTEE: Xx. Xxxxxx X. Xxxxxxx
CLASS OF SHARES: Common Stock
NO. OF SHARES: 300,000 GRANT DATE: February 6, 1996
PER SHARE PURCHASE PRICE: $0.106
Pursuant to the Monarch Dental Corporation 1996 Stock Option and
Incentive Plan (the "Plan"), Monarch Dental Corporation, a Delaware corporation
(the "Company"), hereby grants, sells and issues to the person named above (the
"Grantee"), who is an officer or full-time employee of the Company or any of
the Subsidiaries (as defined below) of the Company, the number of shares of
Common Stock, par value $0.01 per share ("Common Stock"), of the Company
indicated above (subject to the provisions below, the "Shares"), for the per
share purchase price specified above, subject to the terms and conditions set
forth herein and in the Plan. The Grantee agrees to the provisions set forth
herein and acknowledges that each such provision is a material condition of the
Company's agreement to issue and sell the Shares to him. The Company hereby
acknowledges receipt of $31,800 in full payment for the Shares. All references
to share prices and amounts herein shall be equitably adjusted to reflect stock
splits, stock dividends, recapitalizations and similar changes affecting the
capital stock of the Company, and any shares of capital stock of the Company
received on or in respect of Shares in connection with any such event
(including any shares of capital stock or any right, option or warrant to
receive the same or any security convertible into or exchangeable for any such
shares) shall be subject to this Agreement on the same basis and extent at the
relevant time as the Shares in respect of which they were issued, and shall be
deemed Shares as if and to the same extent they were issued at the date hereof.
Section 1. Definitions. For the purposes of this Agreement, the
following terms shall have the following respective meanings:
"Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Bankruptcy" means (i) the filing of a voluntary petition under
any bankruptcy or insolvency law, or a petition for the appointment of a
receiver or the making of an assignment for the benefit of creditors, with
respect to the Grantee or any Permitted Transferee, or (ii) the Grantee or any
Permitted Transferee being subjected involuntarily to such a petition or
assignment or to an attachment or other legal or equitable interest with
respect to his assets, which involuntary petition or assignment or attachment
is not discharged
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within 60 days after its date, and (iii) the Grantee or any Permitted
Transferee being subject to a transfer of Restricted Shares by operation of
law, except by reason of death.
"Common Stock" shall mean the Company's Common Stock, par value
$.01 per share.
"Permitted Transferees" shall have the meaning specified in
Section 2.1 of that certain Stockholders' Agreement dated as of February 5,
1996 to which the Grantee, the Company and others are parties (the
"Stockholders' Agreement").
"Restricted Shares" shall initially mean all of the Shares being
purchased by the Grantee on the date hereof, provided that on each anniversary
of the date hereof, prior to the date of any Termination Event, the incremental
number of shares indicated below shall cease to be Restricted Shares and shall
become Vested Shares.
Incremental Total Restricted/
Vesting Date Vested Shares* Vested Shares*
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February 6, 1996 0 300,000/0
February 6, 1997 75,000 225,000/75,000
February 6, 1998 75,000 150,000/150,000
February 6, 1999 75,000 75,000/225,00
February 6, 2000 75,000 0/300,000
"Shares" shall mean the number of shares of Common Stock being
purchased by the Grantee on the date hereof and any additional shares of Common
Stock or other securities received as a dividend on, or otherwise on account
of, the Shares, as contemplated by the first paragraph of this Agreement.
"Subsidiary" shall mean any corporation or limited partnership of
which stock or other equity interests possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock or other equity
interests is owned directly or indirectly by the Company.
"Termination Event" shall mean the termination of the Grantee's
employment with the Company and its subsidiaries pursuant to or under the
circumstances contemplated by Section 6(b) or 6(d) of the Employment Agreement
between the Company, its subsidiary and the Grantee dated as of February 5,
1996.
"Vested Shares" shall mean all Shares which are not Restricted
Shares.
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* Subject to stock splits, stock dividends, recapitalizations
and similar changes, as provided above.
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Section 2. Purchase and Sale of Shares; Investment Representations.
2.1. Purchase and Sale. On the date hereof, the Company hereby sells
to the Grantee, and the Grantee hereby purchases from the Company, the number
of Shares set forth above for the purchase price per share set forth above.
2.2. Investment Representations. In connection with the purchase and
sale of the Shares contemplated by Section 2.1 above, the Grantee hereby
represents and warrants to the Company as follows:
(a) The Grantee is purchasing the Shares for his own account
for investment only, and not for resale or with a view to the distribution
thereof.
(b) The Grantee has had such an opportunity as he has deemed
adequate to obtain from the Company such information as is necessary to permit
him to evaluate the merits and risks of his investment in the Company and has
consulted with his own advisers with respect to his investment in the Company.
(c) The Grantee has sufficient experience in business,
financial and investment matters to be able to evaluate the risks involved in
the purchase of the Shares and to make an informed investment decision with
respect to such purchase.
(d) The Grantee is an "accredited investor" as that term is
defined in Rule 501 promulgated under the Act.
(e) The Grantee can afford a complete loss of the value of the
Shares and is able to bear the economic risk of holding such Shares for an
indefinite period.
(f) The Grantee understands that the Shares are not registered
under the Act (it being understood that the Shares are being issued and sold in
reliance on the exemption provided in Rule 701 thereunder) or any applicable
state securities or "blue sky" laws and may not be sold or otherwise
transferred or disposed of in the absence of an effective registration
statement under the Act and under any applicable state securities or "blue sky"
laws (or exemptions from the registration requirements thereof). The Grantee
further acknowledges that certificates representing the Shares will bear
restrictive legends reflecting the foregoing.
Section 3. Repurchase of Restricted Shares.
3.1. Repurchase. Upon the occurrence of a Termination Event or the
Bankruptcy of the Grantee, the Company or its assigns shall repurchase and the
Grantee and each Permitted Transferee shall sell to it or them all of the
Restricted Shares held by the Grantee or any Permitted Transferee as of the
date of such Termination Event or Bankruptcy at the per share purchase price
set forth above. In addition, upon the Bankruptcy of any of the Grantee's
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Permitted Transferees, the Company or its assigns shall purchase and each such
Permitted Transferee shall sell to it or them all of the Restricted Shares held
by such Permitted Transferee as of the date of such Bankruptcy at a price equal
to the per share purchase price set forth above. The purchase and sale
arrangements contemplated by the preceding sentences of this Section 3.1 are
referred to herein as the "Repurchase."
3.2. Closing Procedure. The Company or its assigns shall effect the
Repurchase by delivering or mailing to the Grantee (and/or, if applicable, his
Permitted Transferees) written notice within six (6) months after the
Termination Event or Bankruptcy, specifying a date within such six-month period
in which the Repurchase shall be effected. Upon such notification, the Grantee
and his Permitted Transferees shall promptly surrender to the Company any
certificates representing the Restricted Shares being purchased, together with
a duly executed stock power for the transfer of such Restricted Shares to the
Company or the Company's assignee or assignees (as contemplated by Section 6,
if applicable). Upon the Company's or its assignee's receipt of the
certificates from the Grantee or his Permitted Transferees, the Company or its
assignee or assignees shall deliver to him, her or them a cashier's check for
the purchase price of the Restricted Shares. At such time, the Grantee and/or
any holder of the Restricted Shares shall deliver to the Company the
certificate or certificates representing the Restricted Shares so repurchased,
duly endorsed for transfer, free and clear of any lien or encumbrances. The
Repurchase obligation specified herein shall survive and remain in effect as to
Restricted Shares following and notwithstanding any public offering by the
Company and certificates representing such Restricted Shares shall bear legends
to such effect.
3.3. Remedy. Without limitation of any other provision of this
Agreement or other rights, in the event that the Grantee, his or her Permitted
Transferees or any other person or entity is required to sell his or her
Restricted Shares pursuant to the provisions of this Section 3 and in the
further event that he or she refuses or for any reason fails to deliver to the
designated purchaser of such Restricted Shares the certificate or certificates
evidencing such Restricted Shares together with a related stock power, such
designated purchaser may deposit the purchase price for such Restricted Shares
with any bank doing business within fifty (50) miles of the Company's principal
office, or with the Company's independent public accounting firm, as agent or
trustee, or in escrow, for the Grantee, his or her Permitted Transferees or
other person or entity, to be held by such bank or accounting firm for the
benefit of and for delivery to him, them or it. Upon such deposit by the
designated purchaser of such amount and upon notice to the person or entity who
was required to sell the Restricted Shares to be sold pursuant to the
provisions of this Section 3, such Restricted Shares shall at such time be
deemed to have been sold, assigned, transferred and conveyed to such purchaser,
the holder thereof shall have no further rights thereto (other than the right
to withdraw the payment thereof held in escrow), and the Company shall record
such transfer in its stock transfer book or in any appropriate manner.
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Section 4. Restrictions on Transfer of Shares. None of the Restricted
Shares now owned or hereafter acquired shall be sold, assigned, transferred,
pledged, hypothecated, given away or in any other manner disposed of or
encumbered, whether voluntarily or by operation of law, except pursuant to
Section 2.1(a)(iii) of the Stockholders' Agreement. Further, no such transfer
of any Shares may be effected unless such transfer is in compliance with all
foreign, federal and state securities laws (including, without limitation, the
Act), and such disposition is in accordance with the terms and conditions of
the Stockholders' Agreement and this Section 4. In connection with any such
transfer of any Shares, the Company may require the transferor to provide at
his or her own expense an opinion of counsel to the transferor, satisfactory to
the Company, that such transfer is in compliance with all foreign, federal and
state securities laws (including without limitation, the Act). Any attempted
transfer of Shares not in accordance with the terms and conditions of this
Section 4 shall be null and void, and the Company shall not reflect on its
records any change in record ownership of any Shares as a result of any such
disposition, shall otherwise refuse to recognize any such disposition and shall
not in any way give effect to any such disposition of any Shares.
The parties acknowledge and agree that, in addition to the foregoing,
the Shares shall be subject to the provisions of Articles II and V of the
Stockholders' Agreement and shall not be deemed Registrable Securities for
purposes of Article IV of the Stockholders' Agreement.
Section 5. Legend. Any certificate(s) representing the Shares shall
carry substantially the following legends:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and conditions
(including repurchase and restrictions against transfers) contained in a
certain Restricted Stock Agreement dated February 6, 1996 between the
Company and the holder of this certificate (copies of which are
available at the offices of the Company for examination)."
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 or the securities laws of
any state. The shares may not be sold or transferred in the absence of
such registration or an exemption from registration."
Section 6. Escrow. In order to carry out the provisions of Sections 3
and 4 of this Agreement more effectively, the Company shall hold the Shares in
escrow together with separate stock powers executed by the Grantee in blank for
transfer, and any Permitted Transferee under Section 2.1(a)(iii) of the
Stockholders' Agreement shall, as an additional condition to any transfer of
Shares, execute a like stock power as to such Shares. The Company shall not
dispose of the Shares except as otherwise provided in this Agreement. In the
event of any Repurchase, the Company is hereby authorized by the Grantee and
each Permitted Transferee, as the Grantee's and each such Permitted
Transferee's attorney-in-fact,
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to date and complete the stock powers necessary for the transfer of the Shares
being purchased and to transfer such Shares in accordance with the terms
hereof. At such time as any Shares are no longer Restricted Shares, the
Company shall, at the written request of the Grantee, deliver to the Grantee
(or the relevant Permitted Transferee) a certificate representing such Shares
with the balance of the Shares to be held in escrow pursuant to this Section 6.
Section 7. Withholding Taxes. The Grantee acknowledges and agrees that
the Company or any of its Subsidiaries have the right to deduct from payments
of any kind otherwise due to the Grantee, or from the Shares held pursuant to
Section 6 hereof, any federal, state or local taxes of any kind required by law
to be withheld with respect to the purchase of the Shares by the Grantee. In
furtherance of the foregoing the Grantee agrees to elect, in accordance with
Section 83(b) of the Internal Revenue Code of 1986, as amended, to recognize
ordinary income in the year of acquisition of the Shares, and to pay to the
Company all withholding taxes shown as due on his Section 83(b) election form,
or otherwise ultimately determined to be due with respect to such election,
based on the excess, if any, of the fair market value of such Shares as of the
date of the purchase of such Shares by the Grantee over the purchase price for
such Shares.
Section 8. Assignment. At the discretion of the Board of Directors of
the Company, the Company shall have the right to assign the right to exercise
its obligation and rights with respect to the Repurchase to any person or
persons, in whole or in part in any particular instance, upon the same terms
and conditions applicable to the exercise thereof by the Company, and such
assignee or assignees of the Company shall then take and hold any Shares so
acquired subject to such terms as may be specified by the Company in connection
with any such assignment.
Section 9. Miscellaneous Provisions.
9.1. Record Owner; Dividends. The Grantee and any Permitted
Transferees, during the duration of this Agreement, the Grantee and any
Permitted Transferees shall be considered the record owners of and shall be
entitled to vote the Shares. The Grantee and any Permitted Transferees shall
be entitled to receive all dividends and any other distributions declared on
the Shares; provided, however, that the Company is under no duty to declare any
such dividends or to make any such distribution.
9.2. Equitable Relief. The parties hereto agree and declare that legal
remedies are inadequate to enforce the provisions of this Agreement and that
equitable relief, including specific performance and injunctive relief, may be
used to enforce the provisions of this Agreement.
9.3. Change and Modifications. This Agreement may not be orally
changed, modified or terminated, nor shall any oral waiver of any of its terms
be effective. This Agreement may
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be changed, modified or terminated only by an agreement in writing signed by
the Company and the Grantee.
9.4. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
9.5. Headings. The headings are intended only for convenience in
finding the subject matter and do not constitute part of the text of this
Agreement and shall not be considered in the interpretation of this Agreement.
9.6. Saving Clause. If any provision(s) of this Agreement shall be
determined to be illegal or unenforceable, such determination shall in no
manner affect the legality or enforceability of any other provision hereof.
9.7. Notices. All notices, requests, consents and other communications
shall be in writing and be deemed given when delivered personally, by telex or
facsimile transmission or when received if mailed by first class registered or
certified mail, postage prepaid. Notices to the Company or the Grantee shall
be addressed as set forth underneath their signatures below, or to such other
address or addresses as may have been furnished by such party in writing to the
other. Notices to any holder of the Shares other than the Grantee shall be
addressed to the address furnished by such holder to the Company.
9.8. Benefit and Binding Effect. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto, their respective
successors, assigns, and legal representatives. The Company has the right to
assign this Agreement, and such assignee shall become entitled to all the
rights of the Company hereunder to the extent of such assignment.
9.9. Counterparts. For the convenience of the parties and to
facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
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IN WITNESS WHEREOF, the Company and the Grantee have executed this
Agreement as of the date first above written.
MONARCH DENTAL CORPORATION
By: /s/ XXXXXX X. XXXXXXX
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Name: Xxxxxx X. Xxxxxxx
Title: President
GRANTEE
/s/ XXXXXX X. XXXXXXX
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Xx. Xxxxxx X. Xxxxxxx
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Address
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