EXHIBIT 10.11
RIVER HOLDING CORP.
STOCK SUBSCRIPTION AGREEMENT
THIS STOCK SUBSCRIPTION AGREEMENT (this "Agreement") is made and
entered into as of April 7, 1998 by and between River Holding Corp. ("Holding")
and _________________________ ("Purchaser").
R E C I T A L S:
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A. Holding desires to sell to Purchaser, and Purchaser desires to
purchase, shares of Common Stock, $0.01 par value per share, of Holding
("Common Stock"), subject to the terms and conditions set forth in this
Agreement and Holding's 1998 Executive Stock Subscription Plan. The date on
which such sale and purchase occur shall be April 7, 1998 (the "Closing Date").
B. In order to induce Holding to sell such shares of Common Stock,
Purchaser agrees to hold such shares subject to the restrictions and interests
created by this Agreement.
A G R E E M E N T:
- - - - - - - - -
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and conditions contained herein, the parties agree as follows:
1. Sale and Purchase of Stock. Holding hereby agrees to sell to
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Purchaser, subject to the conditions and restrictions contained in this
Agreement, and Purchaser hereby agrees to purchase from Holding, _____________
shares (individually, a "Share," and collectively, the "Shares") of Common
Stock, at a price of $10.00 per Share, for an aggregate purchase price of
$____________ (the "Purchase Price"). The Purchase Price shall be payable by
delivery of cash or Purchaser's check in the amount of $__________. Purchaser
shall deliver the cash or check to Holding prior to the Closing Date. In
connection with the purchase of Shares hereunder, Purchaser acknowledges that he
or she has reviewed the memorandum regarding Section 83(b) of the Internal
Revenue Code of 1986, as amended, attached hereto as Exhibit A.
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2. Restriction on Transfer of the Shares. Except as otherwise
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provided in Section 5, Purchaser may not sell, transfer, assign, pledge,
hypothecate or otherwise dispose of (collectively, "Transfer") any of the
Shares, or any right, title or interest therein prior to the earlier of the
fifth anniversary of the Closing Date or the consummation of the Initial Public
Offering (as defined below) and, thereafter, any Transfer must be in compliance
with Sections 4 and 6 hereof. In connection with any public offering (by
Holding or any subsidiary) Purchaser agrees to execute a reasonable lock up
agreement (for up to 180 days) covering the Shares. Any purported Transfer or
Transfers (including involuntary Transfers initiated by operation of legal
process) of any of the Shares or any right, title or interest therein, except in
strict compliance with the terms and conditions of this Agreement, shall be null
and void. The term "Initial Public Offering" shall mean an underwritten public
offering which results in gross proceeds to Xxxxxx Respiratory Care Inc. (the
"Company") in excess of $25 million from the sale of common stock of the
Company.
3. Repurchase Option Upon Termination.
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(a) Vesting of Shares. For purposes of this Agreement, and
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subject to Section 3(b) hereof, the Shares purchased hereunder shall vest in
their entirety on the third anniversary of the Closing Date, so that prior to
the third anniversary none of the Shares shall be deemed vested and on and after
the third anniversary of the Closing Date, all of the Shares shall be deemed
vested. For purposes hereof, shares of capital stock or other securities of
Holding or any successor or assign of Holding which are issued in respect of, in
exchange for or in substitution of the Shares by reason of any stock dividend,
stock split, reverse split, recapitalization, reclassification, combination,
merger, consolidation or otherwise, including without limitation by reason of
Section 7.4 of that certain Shareholders Agreement among Holding, the Company
and certain other signatories thereto (the "Shareholders Agreement), shall be
deemed vested at the same time as the underlying Shares on which such shares of
capital stock or other securities were issued are deemed vested. Such shares of
capital stock or other securities issued in respect of, in exchange for or in
substitution of Shares which have not vested shall thereafter vest at the same
time as such underlying Shares on which such shares of capital stock or other
securities were issued vest.
(b) Holding's Repurchase Option. In the event that Purchaser's
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employment or other relationship with Holding and all of its directly or
indirectly owned subsidiaries (individually, a "Subsidiary," and collectively,
the "Subsidiaries") terminates for any reason (including, without limitation, by
reason of Purchaser's death, disability, retirement, voluntary resignation or
dismissal by Holding or any of its Subsidiaries, with or without Cause (as
defined below)), Holding shall have the option (the "Repurchase Option") to
purchase from Purchaser all or any portion of the Shares for a period of six
months after the effective date of such termination (the effective date of
termination is hereinafter referred to as the "Termination Date").
(c) Repurchase Price. The purchase price (the "Repurchase
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Price") for each Share to be purchased pursuant to the Repurchase Option shall
be equal to (i) the Fair Market Value (as defined below), in the event
Purchaser's employment or other relationship with Holding and all of its
Subsidiaries terminates by reason of Purchaser's death or disability, (ii) the
greater of the Purchase Price or 90% of the Fair Market Value, in the event such
employment or other relationship is terminated by Holding or any of its
Subsidiaries without Cause or by Purchaser in the event of a Qualifying
Resignation (as defined below), (iii) in the event such employment or other
relationship is terminated by Purchaser's resignation, other than a Qualifying
Resignation, (A) for vested Shares, the greater of the Purchase Price or 80% of
the Fair Market Value, and (B) for unvested Shares, the greater of the Purchase
Price or Book Value, or (iv) in the event such
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employment or other relationship is terminated for Cause, (X) for vested Shares,
the greater of the Purchase Price or Book Value, and (Y) for unvested Shares,
the Purchase Price. As used herein, (i) the "Fair Market Value" shall be the
fair market value of a Share as of the date of repurchase by Holding; (ii) the
"Book Value" shall be equal to the Purchase Price (subject to adjustment as set
forth below) plus the net income or minus the net loss per Share for all shares
of Common Stock from the Closing Date to the end of the fiscal quarter
immediately preceding the Termination Date, in each case, as determined by the
Board of Directors of Holding, acting in good faith, which determination shall
be final and binding; (iii) "Cause" shall mean (i) Purchaser's conviction of, or
the entry of a pleading of guilty or nolo contendre by Purchaser to, a felony or
a crime involving moral turpitude, (ii) Purchaser's material failure to perform
his duties required under his employment relationship, material failure to
comply with Holding's and/or any Subsidiary's standard policies and procedures
generally applicable to employees, or failure to comply with any provision of
his employment agreement after having received written notice from Holding
and/or a Subsidiary identifying such failure and after having received an
opportunity of at least ten (10) days in which to cure the failure so identified
by Holding and/or a Subsidiary if such failure is susceptible to cure, (iii) a
willful act by Purchaser as a result of which he receives an improper personal
benefit at the expense of Holding and/or a Subsidiary, (iv) an act of fraud or
dishonesty committed by Purchaser against Holding and/or a Subsidiary, or (v)
any other misconduct by Purchaser that is materially injurious to the business
or reputation of Holding and/or a Subsidiary; and (iv) "Qualifying Resignation"
shall mean a resignation by Purchaser within 60 days after any of the following:
(A) a change of Purchaser's duties and responsibilities which cause Purchaser's
position to be one of materially lesser responsibility and scope; or (B) a
reduction in Purchaser's base salary. The Repurchase Price for any Shares to be
purchased pursuant to the Repurchase Option shall be increased or decreased
appropriately to reflect any distribution of stock or other securities of
Holding or any successor or assign of Holding which is made in respect of, in
exchange for or in substitution of the Shares by reason of any split, reverse
split, combination, recapitalization, reclassification, merger, consolidation or
otherwise. The Repurchase Option shall be exercised by Holding by delivery to
Purchaser, within the six-month period specified above, of a written notice
specifying (a) the number of Shares to be purchased and (b) a day, which shall
not be more than 30 days after the date such notice is delivered, on or before
which Purchaser shall surrender the certificate or certificates representing the
Shares to be purchased pursuant to the Repurchase Option (duly endorsed in blank
for Transfer) at the principal office of Holding in exchange for a check,
payable to Purchaser in the amount equal to the Repurchase Price, calculated as
provided in this Section 3(c), for all Shares to be purchased. If Purchaser
fails to surrender the certificate or certificates evidencing the Shares on or
before such date, from and after such date the Shares which Holding elected to
repurchase shall be deemed to be no longer outstanding, and Purchaser shall
cease to be a stockholder with respect to such Shares and shall have no rights
with respect thereto except only the right to receive payment of the Repurchase
Price, without interest, upon surrender of the certificate or certificates
therefor (with a stock assignment or stock assignments duly endorsed in blank
for Transfer).
(d) Termination of Repurchase Option. The Repurchase Option
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shall terminate upon an Initial Public Offering.
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4. Right of First Refusal.
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(a) Sales; Notice. At any time on or after the fifth anniversary
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of the Closing Date, Purchaser may Transfer for cash (and only for such form of
consideration) any or all of the Shares to any third party subject to the
provisions of this Section 4 and Sections 7(c) and 9(a) hereof. Prior to any
such intended Transfer, Purchaser shall first give at least written notice (the
"Notice") to Holding specifying (i) Purchaser's bona fide intention to sell such
Shares; (ii) the name(s) and address(es) of the proposed transferee(s); (iii)
the number of Shares Purchaser proposes to Transfer (individually, an "Offered
Share," and collectively, the "Offered Shares"); (iv) the price for which
Purchaser proposes to Transfer each Offered Share (the "Proposed Purchase
Price"); and (v) all other material terms and conditions of the proposed
Transfer.
(b) Election by Holding. Within 15 days after receipt of the
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Notice, Holding (or its nominee(s) or assignee(s)) may elect to purchase all but
not less than all of the Offered Shares at the price and on the terms and
conditions set forth in the Notice by delivery of written notice of such
election to Purchaser, specifying a day, which shall not be more than 30 days
after such notice is delivered, on or before which Purchaser shall surrender (if
Purchaser has not already done so) the certificate or certificates representing
the Offered Shares (with a stock assignment or stock assignments duly endorsed
in blank for Transfer) at the principal office of Holding. Within 30 days after
delivery of such notice to Purchaser, Holding (or its nominee(s) or assignee(s))
shall deliver to Purchaser a check, payable to Purchaser in the amount equal to
the product of the Proposed Purchase Price multiplied by the number of Offered
Shares (the "First Refusal Price") in exchange for the Offered Shares. If
Purchaser fails to so surrender such certificate or certificates on or before
such date, from and after such date the Offered Shares shall be deemed to be no
longer outstanding, and Purchaser shall cease to be a stockholder with respect
to such Shares and shall have no rights with respect thereto except only the
right to receive payment of the First Refusal Price, without interest, upon
surrender of the certificate or certificates therefor (duly endorsed in blank
for Transfer). If Holding (or its nominee(s) or assignee(s)) does not elect to
purchase all of the Offered Shares, Purchaser shall be entitled to Transfer the
remaining portion of the Offered Shares to the transferee(s) named in the Notice
at the Proposed Purchase Price or at a higher price and on the terms and
conditions set forth in the Notice; provided, however, that such Transfer must
be consummated within 90 days after the date of the Notice and any proposed
Transfer after such 90-day period may be made only by again complying with the
procedures set forth in this Section 4.
(c) Termination of Right of First Refusal. All rights provided
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to Holding under this Section 4 shall terminate upon the consummation of an
Initial Public Offering. Upon a Transfer of the Shares pursuant to Section 4(b)
hereof, the rights provided Holding under this Section 4 shall terminate with
respect to the Shares (and only those Shares) so Transferred.
5. Permitted Transfers. Purchaser may, at any time, Transfer any or
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all of the Shares (a) intervivos to Purchaser's spouse or issue, a trust for
their benefit or pursuant to any will or testamentary trust or (b) upon
Purchaser's death, to any person in accordance with the laws of descent and/or
testamentary distribution (such persons are collectively referred to herein as
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"Permitted Transferees"). Notwithstanding the foregoing in this Section 5,
Shares shall not be Transferred pursuant to this Section 5 until the Permitted
Transferee executes a valid undertaking, in form and substance reasonably
satisfactory to Holding and the FS Entities (as defined below), to the effect
that the Permitted Transferee and the Shares so Transferred shall thereafter
remain subject to all of the provisions of this Agreement (including the
Repurchase Option) as though the Permitted Transferee were a party to this
Agreement, bound in every respect in the same way as Purchaser. Transfers made
in accordance with this Section 5 shall not be subject to the provisions of
Section 4 of this Agreement.
6. Other Agreements.
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(a) If FS Equity Partners III, L.P., a Delaware limited
partnership, FS Equity Partners International, L.P., a Delaware limited
partnership, and FS Equity Partners IV, L.P., a Delaware limited partnership
(collectively, the "FS Entities"), find a third party buyer for all of the
shares of Common Stock (or Company Common Stock, if the FS Entities hold Company
Common Stock (as defined below)) held by it (whether such sale is by way of
purchase, exchange, merger or other form of transaction), or if Holding finds a
third party buyer for all of the shares of Common Stock of the Company ("Company
Common Stock") held by it (whether such sale is by way of purchase, exchange,
merger or other form of transaction), then at the request of the FS Entities or
Holding, Purchaser shall sell all of his or her shares of Common Stock on the
same terms and conditions as apply to the sale by Holding of its shares of
Company Common Stock or the FS Entities of the Common Stock (or Company Common
Stock, if the FS Entities hold Company Common Stock); provided however, that if
such buyer is a party other than a corporation whose common stock is publicly-
traded, Purchaser shall not be required to accept consideration other than cash.
(b) If FS Entities find a third-party buyer (other than a
permitted transferee of Holding or the FS Entities (as defined in the
Shareholders Agreement)), for all or part of the shares of Common Stock (or
Company Common Stock, if the FS Entities hold Company Common Stock) held by the
FS Entities (whether such sale is by way of purchase, exchange, merger or other
form of transaction), the Purchaser shall have the right to sell, on the terms
set forth in a written notice (the "Offering Notice") delivered by the FS
Entities to the Purchaser describing the terms of the proposed sale (including
the minimum sale price for the shares of Common Stock )(or Company Common Stock,
if the FS Entities hold Company Common Stock) that the FS Entities plan to sell,
that amount of his or her Shares which constitute the same percentage of his or
her Shares as the percentage of Common Stock (or Company Common Stock, if the FS
Entities hold Company Common Stock) sold by the FS Entities, in the aggregate.
Each such right shall be exercisable by delivering written notice to the FS
Entities within 15 days after receipt of the Offering Notice. Failure to
exercise such right within such 15-day period shall be regarded as a waiver of
such rights. The obligations of the FS Entities under this Section 6(b) shall
terminate upon an Initial Public Offering. The transactions contemplated by
Section 7.4 of the Shareholders Agreement shall not give rise to any rights of
Purchaser under this Section 6(b).
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(c) In addition to the obligations of the Purchaser to sell the
Shares pursuant to Section 6(a) above, the Purchaser hereby agrees to exchange
or otherwise transfer his or her Shares, in the same manner as the FS Entities
exchange or otherwise transfer its shares of Common Stock in connection with the
transactions contemplated by Section 7.4 of the Shareholders Agreement.
Purchaser hereby consents to any sale, transfer, reorganization, exchange,
merger, combination, liquidation, dissolution or other form of transaction
described in this Section 6 or as contemplated by Section 7.4 of the
Shareholders Agreement and agrees to execute such agreements, powers of
attorney, voting proxies or other documents and instruments as may be necessary
or desirable to consummate such sale, transfer, reorganization, exchange,
merger, combination or other form of transaction. Purchaser further agrees to
timely take such other actions as Holding or the FS Entities or the Company may
reasonably request in connection with the approval of the consummation of such
sale, transfer, reorganization, exchange, merger, combination or other form of
transaction, including voting as a stockholder to approve any such sale,
transfer, reorganization, exchange, merger, combination or other form of
transaction and waiving any appraisal rights that Purchaser may have in
connection therewith. The Company shall succeed to all of Holding's rights under
this Agreement and the rights of the FS Entities under this Agreement shall
remain in full force and effect upon consummation of the transactions
contemplated by Section 7.4 of the Shareholders Agreement, and Purchaser shall
execute an amendment to this Agreement in form and substance satisfactory to the
Company acknowledging the Company's and the FS Entities' rights hereunder. As
provided in Section 9(h), this Agreement shall apply to all securities received
by Purchaser in exchange for his or her Shares upon consummation of the
transactions contemplated by Section 7.4 of the Shareholders Agreement.
(d) The obligations of Purchaser pursuant to Section 6(a) shall
be binding on any transferee of any of the Shares (except a transferee of Shares
in a Public Market Sale (as defined below)) and any transfer of any of the
Shares shall be void unless a written commitment to be bound by such provisions
from such transferee is delivered to Holding and the FS Entities and the Company
prior to any transfer. The obligations of Purchaser pursuant to Section 6(a)
shall apply to any securities received in substitution or exchange for the
Shares. A "Public Market Sale" shall mean any sale of shares of Common Stock
into the public market after an Initial Public Offering, which is made pursuant
to Rule 144 promulgated under the Act or pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission and
shall not include a negotiated private sale transaction or other disposition of
shares of Common Stock.
7. Investment Representations. Purchaser represents and warrants to
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Holding as follows:
(a) Purchaser's Own Account. Purchaser is acquiring the Shares
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for Purchaser's own account and not with a view to or for sale in connection
with any distribution of the Shares.
(b) Access to Information. Purchaser (i) is familiar with the
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business of Holding and its Subsidiaries; (ii) has had an opportunity to discuss
with representatives of Holding
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and its Subsidiaries the condition of and prospects for the continued operation
and financing of Holding and its Subsidiaries and such other matters as
Purchaser has deemed appropriate in considering whether to invest in the Shares;
and (iii) has been provided access to all available information about Holding
and its Subsidiaries requested by Purchaser.
(c) Shares Not Registered. Purchaser understands that the Shares
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have not been registered under the Act or registered or qualified under the
securities laws of any state and that Purchaser may not Transfer the Shares
unless they are subsequently registered under the Act and registered or
qualified under applicable state securities laws, or unless an exemption is
available which permits Transfers without such registration and qualification.
8. Partial Termination. This Agreement shall terminate with respect
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to those Shares which are (a) acquired by Holding pursuant to Section 3(a), upon
such acquisition; or (b) acquired by Holding or a third party pursuant to
Section 4 hereof, upon such acquisition; provided, however, that with respect to
those Shares that are acquired by a third party, the obligations of Section 6 of
this Agreement shall survive such termination.
9. Miscellaneous.
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(a) Legends on Certificates. Any and all certificates now or
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hereafter issued evidencing shares of Common Stock shall have endorsed upon
them a legend substantially as follows:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
UPON TRANSFER AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT IN ACCORDANCE WITH THE TERMS
AND CONDITIONS OF THAT CERTAIN STOCK SUBSCRIPTION AGREEMENT DATED AS OF
APRIL 7, 1998 BY AND BETWEEN RIVER HOLDING CORP. AND THE ORIGINAL
PURCHASER HEREOF, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
EXECUTIVE OFFICES OF RIVER HOLDING CORP."
Such certificates shall also bear such legends and shall be subject to such
restrictions on transfer as may be necessary to comply with all applicable
federal and state securities laws and regulations.
(b) Further Assurances. Each party hereto agrees to perform any
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further acts and execute and deliver any documents which may be reasonably
necessary to carry out the intent of this Agreement.
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(c) Notices. Except as otherwise provided herein, all notices,
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requests, demands and other communications under this Agreement shall be in
writing, and if given by telegram, telecopy or telex, shall be deemed to have
been validly served, given or delivered when sent, if given by personal
delivery, shall be deemed to have been validly served, given or delivered upon
actual delivery and, if mailed, shall be deemed to have been validly served,
given or delivered three business days after deposit in the United States mails,
as registered or certified mail, with proper postage prepaid and addressed to
the party or parties to be notified, at the following addresses (or such other
address(es) a party may designate for itself by like notice):
If to Holding:
River Holding Corp.
c/o Xxxxxxx Xxxxxx & Co. Incorporated
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
If to the FS Entities:
Xxxxxxx Xxxxxx & Co. Incorporated
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
If to Purchaser:
______________________________
______________________________
______________________________
(d) Amendments. This Agreement may be amended only by a written
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agreement executed by both of the parties hereto and the FS Entities.
(e) Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of Delaware.
(f) Disputes. In the event of any dispute among the parties arising
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out of this Agreement, the prevailing party shall be entitled to recover from
the nonprevailing party the reasonable expenses of the prevailing party
including, without limitation, reasonable attorneys' fees and expenses.
(g) Entire Agreement. This Agreement and the instruments and
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agreements referenced herein constitute the entire agreement and understanding
among the parties
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pertaining to the subject matter hereof and supersede any and all prior
agreements, whether written or oral, relating hereto.
(h) Recapitalizations or Exchanges Affecting Holding's Capital Stock.
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The provisions of this Agreement shall apply to any and all shares of capital
stock or other securities of Holding or any successor or assign of Holding which
may be issued in respect of, in exchange for or in substitution of, the Shares
by reason of any stock dividend, stock split, reverse split, recapitalization,
reclassification, combination, merger, consolidation or otherwise, including as
contemplated by Section 7.4 of the Shareholders Agreement, and such shares or
other securities shall be encompassed within the term "Shares" for purposes of
this Agreement.
(i) No Rights. Nothing in this Agreement shall affect in any manner
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whatsoever the rights of Holding or any of its Subsidiaries to terminate
Purchaser's employment or other relationship for any reason, with or without
Cause, subject to the terms and conditions of any agreement to which Purchaser
may be a party.
(j) Disclosure. Holding shall have no duty or obligation to
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affirmatively disclose to Purchaser, and Purchaser shall have no right to be
advised of, any material non-public information regarding Holding or any of its
Subsidiaries at any time prior to, upon or in connection with Holding's
repurchase of the Shares under this Agreement at or after the cessation or
termination of Purchaser's employment or other relationship with Holding and/or
any of its Subsidiaries.
(k) Successors and Assigns. Holding may assign with absolute
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discretion any or all of its rights and/or obligations and/or delegate any of
its duties under this Agreement to any of its affiliates, successors and/or
assigns and this Agreement shall inure to the benefit of, and be binding upon,
such respective affiliates, successors and/or assigns of Holding in the same
manner and to the same extent as if such affiliates, successors and/or assigns
were original parties hereto. Without limiting the foregoing, Holding may assign
the Repurchase Option and/or the right of first refusal provided for in Sections
3 and 4 of this Agreement, respectively, to any nominee, affiliate, successor
and/or assign. The FS Entities may assign its rights under Section 6 to any of
its permitted transferees (as defined in the Shareholders Agreement) or to a
purchaser of shares of Common Stock then owned by the FS Entities. Purchaser
may not assign any or all of its rights and/or obligations and/or delegate any
or all of its duties under this Agreement without the prior written consent of
Holding and the FS Entities.
(l) Headings. Introductory headings at the beginning of each section
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and subsection of this Agreement are solely for the convenience of the parties
and shall not be deemed to be a limitation upon or description of the contents
of any such section and subsection of this Agreement.
(m) Counterparts. This Agreement may be executed in two counterparts,
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each of which shall be deemed an original and both of which, when taken
together, shall constitute one and the same Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
HOLDING:
RIVER HOLDING CORP.
By: ________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
PURCHASER:
_______________________________________
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