EXHIBIT 10.44
STOCK GRANT AGREEMENT
THIS STOCK GRANT AGREEMENT (the "Agreement") is made and entered into the
23rd day of January, 2002, between CARECENTRIC, INC., a Delaware corporation
(the "Corporation"), and XXXX X. XXXXX (the "Grantee").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Grantee desires to be granted, and the Corporation desires to
grant to Grantee, shares of Series E Preferred Stock ("Series E Stock") of the
Corporation, $.001 par value, as part of the compensation package provided to
Grantee in his capacity as President and Chief Executive Officer of the
Corporation.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. GRANT OF STOCK. The Corporation hereby grants to Grantee and Grantee
hereby accepts from the Corporation an aggregate of 210,000 shares of Series E
Stock (the "Shares"), said aggregate number of Shares to be issued at no cost to
Grantee, in consideration of Grantee accepting the position of president and
chief executive officer of the Corporation, and subject to the vesting and
forfeiture provisions as specified below.
2. INVESTMENT REPRESENTATIONS. Grantee hereby covenants, represents and
warrants to the Corporation as follows, and acknowledges that each such
covenant, representation and warranty is material to and is being relied upon by
the Corporation.
2.1 Grantee is receiving the Shares solely for Grantee's own account
for investment purposes and not with a view or interest of participating,
directly or indirectly, in the resale or distribution of all or any part
thereof.
2.2 Grantee acknowledges that all the Shares acquired by Grantee are
to be issued without registration and in reliance upon certain exemptions from
registration requirements under the Federal Securities Act of 1933, as amended,
and under applicable state securities laws. Grantee will make no transfer or
assignment of any of the Shares except in compliance with the Securities Act of
1933, as amended, and applicable state securities laws. Grantee consents, agrees
and acknowledges that the certificate or certificates representing the Shares
will be inscribed with a legend regarding the foregoing.
2.3 Grantee is aware that no federal or state agency has made any
recommendation or endorsement of the Shares.
2.4 Neither the Corporation nor any person acting on its behalf has
offered the Shares to Grantee by means of general or public solicitation or
general or public advertising, such as by newspaper or magazine advertisements,
by broadcast media, or at any seminar or meeting whose attendees were solicited
by such means.
2.5 Grantee has received and carefully reviewed disclosure information
of the Corporation prior to investment, including proxy statements, Forms 10-K,
10-Q and 8-K filed with the Securities and Exchange Commission ("SEC"). Grantee
has had a reasonable opportunity to ask questions of and receive answers from
the Corporation's officers and directors concerning the Shares and the
Corporation and to obtain any additional information, documents or instruments
available without unreasonable effort or expense necessary to verify the
accuracy of the information provided by the Corporation or to answer any
questions which Grantee may have. All such questions have been answered to the
full satisfaction of Grantee. No oral information furnished to Grantee in
connection with the offering of the Shares is inconsistent with any written
information provided by the Corporation. Grantee is an "accredited investor," as
defined under the Securities Act of 1933, as amended (the "Act"). Grantee
recognizes that Xxxxxx Xxxxxx Xxxxxxx LLP, counsel for the Corporation, has not
conducted due diligence on behalf of Grantee or Grantee's representatives.
2.6 Grantee has had an opportunity to consult with Grantee's own legal
counsel, tax and financial advisors regarding the Shares.
2.7 Grantee acknowledges that the ownership of Shares in the
Corporation is a speculative investment. Grantee acknowledges that no public or
secondary market exists or may ever exist for the Shares and, accordingly,
Grantee will not be able to readily liquidate Grantee's investment in such
Shares.
2.8 Grantee acknowledges and represents that no commission or other
remuneration has been paid or given directly or indirectly in connection with
the grant of the Shares to Grantee.
2.9 Grantee has full legal power and authority to execute and deliver,
and to perform Grantee's obligations under, this Agreement and such execution,
delivery and performance will not violate any agreement, contract, law, rule,
decree or other legal restriction by which Grantee is subject or bound.
2.10 Grantee understands that Grantee may suffer adverse tax
consequences as a result of Grantee's receipt or disposition of the Shares.
Grantee represents that Grantee has consulted any tax consultants Grantee deems
advisable in connection with the receipt or disposition of the Shares and that
Grantee is not relying on the Corporation for any tax advice.
2.11 The address set forth on the signature page to this Agreement is
Grantee's true and correct residence and Grantee has no present intention of
becoming a resident of any other state or country. All information that Grantee
has heretofore provided to the Corporation and that is provided in this
Agreement is true and correct as of the date of this Agreement.
2.12 Grantee acknowledges that the Shares are "restricted securities"
within the meaning of Rule 144 promulgated under the Act; that the Shares are
not registered under the Act; and that although resales may be permitted under
certain circumstances, the Corporation is under no obligation to take any action
to establish those circumstances. Grantee understands the limitations imposed by
the Act and is familiar with Rule 144, as presently in effect, and the
conditions that must be met for certain executive officers regarding the resale
of "restricted securities" and the requirement that the Shares must be held for
a holding period after grant from the Corporation prior to resale.
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2.13 Grantee acknowledges that the Corporation may rely on the
foregoing representations and warranties in determining whether to enter into
this Agreement. If for any reason the representations and warranties are no
longer true and accurate prior to acceptance of this Agreement by the
Corporation, Grantee will give the Corporation prompt written notice of the
inaccuracy.
3. FORFEITABILITY AND VESTING CONDITIONS APPLICABLE TO SHARES.
3.1 Fifty percent (50%) of the Shares (105,000 Shares) shall vest in
accordance with the following vesting schedule until all 105,000 Shares are
vested. All references to the number of Vested Shares are subject to adjustment
for stock splits, stock dividends and the like.
Vesting Schedule
Vesting Commencement Date: The date of this Agreement.
Total Number of Shares: 105,000
Vesting Schedule: 1/3rd of the Total Number of Shares
shall vest on the first anniversary of
the Vesting Commencement Date and 1/3rd
of the Total Number of Shares shall vest
each anniversary thereafter until the
third (3rd) anniversary of the Vesting
Commencement Date, when the Total Number
of shares shall be vested.
3.2 Upon the termination of Grantee's employment by the Corporation
for any reason prior to the third (3rd) anniversary of the Vesting Commencement
Date, any unvested Shares shall be forfeited to the Corporation.
3.3 Fifty percent (50%) of the Shares (105,000 Shares) shall be
subject to forfeiture pro rata over a three (3) year period if the Corporation's
financial, cash flow and performance milestone goals are not achieved in the
manner set forth in detail on Exhibit A attached hereto ("Goals") for each of
the three (3) years commencing as of January 1, 2002 ("Forfeitability
Conditions"). At the end of each year during such three (3) year period,
one-third (1/3) of the Shares subject to the Forfeitability Conditions shall
either be forfeited in whole or in part (if the Goals for that year are not
completely achieved) or such Shares shall be released from the Forfeitability
Conditions (if the Goals for that year are completely achieved). The Corporation
shall notify Grantee no later than fifteen (15) days after the end of each year
as to whether the Goals were achieved during the previous year. All references
to the number of Shares in this Section 3.3 are subject to stock splits, stock
dividends and the like.
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3.4 In addition to any other limitation on transfer created by
applicable securities laws, Grantee shall not assign, encumber or dispose of any
interest in the Shares while the Shares are subject to vesting and to
Forfeitability Conditions. After any Shares have vested or have been released
from Forfeitability Conditions, Grantee shall not assign, encumber or dispose of
any interest in such Shares except in compliance with applicable securities
laws.
3.5 As a result of any forfeiture of unvested Shares or Shares
forfeited pursuant to Forfeitability Conditions, the Corporation shall become
the legal and beneficial owner of the Shares being forfeited and shall have all
rights and interest therein or related thereto, and the Corporation shall have
the right to transfer to its own name the number of Shares being forfeited to
the Corporation or to cancel them on its books and records such that they are no
longer issued and outstanding, without further action by Grantee.
3.6 For purpose of facilitating the enforcement of the provisions of
Section 3 hereof, Grantee agrees that the Corporation will retain any stock
certificates representing unvested Shares or Shares subject to Forfeitability
Conditions until such Shares are fully vested or are no longer subject to
Forfeitability Conditions. With respect to any Shares that are forfeited
pursuant to this Section 3, Grantee agrees that without the execution of further
documents or instruments by Grantee, the Corporation shall have the right, and
is hereby irrevocably authorized and appointed, to transfer such forfeited
Shares upon the books and records of the Corporation and such transfer shall be
binding upon and enforceable against Grantee and Grantee's successors, assigns,
heirs, beneficiaries and legal representatives. Grantee agrees that in order to
ensure compliance with the restrictions referred to herein the Corporation may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that if the Corporation transfers its own securities, it may make
appropriate notations to the same effect in its own records. The Corporation
shall issue and deliver to Grantee (i) certificates for all Shares that vest no
later than ten (10) business days after the date such vesting occurs, and (ii)
for all Shares as to which the Forfeitability Conditions no longer apply, no
later than ten (10) business days after the Corporation notifies Grantee
pursuant to Section 3.3 that the Forfeitability Conditions no longer apply to
such Shares.
3.7 Notwithstanding any provision in this Section 3 to the contrary,
all Shares shall immediately vest and no longer be subject to Forfeitability
Conditions upon the consummation of a Change of Control Transaction (as defined
in Section 7 hereof).
4. LEGENDS ON STOCK CERTIFICATES. The certificate or certificates
representing the Shares shall bear the following legend (as well as any legends
required by applicable state and federal corporate and securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED JANUARY 23, 2002 BETWEEN THE
CORPORATION AND THE GRANTEE, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE CORPORATION.
Upon the expiration of the three (3) year vesting period and three (3) year
duration of Forfeitability Conditions under Section 3 above, the Shares then
held by Purchaser will no longer be subject to the immediately foregoing legend.
After such time, and upon Grantee's request, a new certificate or certificates
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representing the Shares not forfeited shall be issued and delivered to Grantee
without such legend (but with such legends, if any, as may continue to be
required by applicable state and federal corporate and securities laws).
5. SECTION 83(B) ELECTION.
5.1 Section 83(b) of the Internal Revenue Code of 1986, as amended
(the "Code"), taxes as ordinary income the difference between the amount paid
for the Shares and the fair market value of the Shares as of the date any
forfeiture restriction on the Shares lapses. In this context, "forfeiture
restriction" means the right of the Corporation to buy back or otherwise receive
by forfeiture the Shares at the same price paid by Grantee. In the absence of
the stockholder making timely filings of a Section 83(b) election (i.e., within
30 days of the date of purchase or grant of the Shares) with the Internal
Revenue Service, the Internal Revenue Service will measure the fair market value
of the stock at the time the forfeiture restriction lapses (i.e., at the time
the stock vests and the Corporation no longer has the right to repurchase or
otherwise receive by forfeiture the Shares) against the price paid for such
Shares and treat the difference as ordinary income to the stockholder. The
Section 83(b) election accelerates the snapshot of this measurement to the date
the stock was purchased by or otherwise received by the stockholder, rather than
the date the forfeiture restriction lapses (the date of vesting or the date any
forfeiture conditions lapse). Thus, if (a) a Section 83(b) election is timely
made by the stockholder and (b) at the date of purchase or grant the fair market
value of the stock does not exceed the price paid by the stockholder, then no
taxes will be owed by the stockholder in connection with the stock issuance.
Further, by having made the Section 83(b) election, no taxes will be owed by the
stockholder as a result of the lapse of the forfeiture restrictions (i.e., as a
result of the vesting of the stock ownership and the lapse of the Corporation's
right to repurchase or otherwise receive by forfeiture the stock at the price
paid by the stockholder). In addition to filing the Section 83(b) election with
the Internal Revenue Service, the stockholder must file a copy with the
Corporation and must file a copy with stockholder's income tax return.
5.2 The foregoing is only a summary of the effect of United States
federal income taxation with respect to purchase OR GRANT of the shares owned
due to the existence of the VESTING REQUIREMENTS AND FORFEITURE CONDITIONS and
does not purport to be complete. Grantee understands that failure to file such
an election in a timely manner may result in adverse tax consequences for
Grantee. Grantee acknowledges that the foregoing is only a summary of the effect
of United States federal income taxation with respect to purchase or grant of
the Shares hereunder, and does not purport to be complete. Grantee further
acknowledges that the Corporation has directed Grantee to seek independent
advice regarding the applicable provisions of the Code, the income tax laws of
any municipality, state or foreign country in which Grantee may reside, and the
tax consequences of Grantee's death.
5.3 A form of ELECTION UNDER SECTION 83(B) is attached hereto. A
filing version may be obtained from the Corporation or from Grantee's tax
advisor. GRANTEE ACKNOWLEDGES THAT IT IS GRANTEE'S SOLE RESPONSIBILITY AND NOT
THE CORPORATION'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF
GRANTEE REQUESTS THE CORPORATION OR ITS REPRESENTATIVE TO MAKE THIS FILING ON
GRANTEE'S BEHALF.
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5.4 Grantee agrees that simultaneously with the execution and delivery
of this Agreement, Grantee will execute and deliver to the Corporation a copy of
the ACKNOWLEDGMENT AND STATEMENT OF DECISION REGARDING SECTION 83(B) ELECTION
attached hereto.
6. REGISTRATION RIGHTS. Grantee shall have piggyback registration rights
with respect to the Shares on the same terms and on an equal priority basis with
the piggyback registration rights of (i) Mestek, Inc. ("Mestek") pursuant to the
Second Amended and Restated Agreement and Plan of Merger and Investment
Agreement dated as of October 25, 1999 by and among the Corporation, Mestek,
MCS, Inc., Xxxx X. Xxxx ("Xxxx"), Xxxxxxx X. Xxxx and E. Xxxxxxx Xxxx, and (ii)
Xxxx pursuant to the Series D Convertible Preferred Stock Purchase Agreement
dated June 12, 2000 between the Corporation and Xxxx.
7. ADDITIONAL STOCK ISSUANCES; PREEMPTIVE RIGHTS. From the date of this
Agreement through January 31, 2003, the Corporation shall grant shares of Series
E Stock to Grantee to maintain his percentage ownership of the Corporation's
outstanding capital stock as of the date hereof simultaneously with the
Corporation's issuance of equity securities for an aggregate consideration of up
to $6 million (exclusive of option exercises under the Corporation's omnibus
equity incentive plan), other than pursuant to a Change of Control Transaction.
For all such stock issuances by the Corporation that result in aggregate
consideration in excess of $6 million, Grantee shall have the right to purchase
securities in such offering (based on the offering amount in excess of $6
million) on the same terms and conditions thereof so as to maintain a minimum
ownership percentage of three percent (3%) of the Corporation's outstanding
capital stock on a fully diluted basis. For purposes of this Agreement, Change
of Control Transaction means (i) the acquisition of the Corporation by a
non-affiliated third party pursuant to a merger, consolidation or business
combination; (ii) the sale of all or a substantial part of the assets of the
Corporation to a non-affiliated third party; (iii) the occurrence of a
transaction pursuant to which any entity or person shall, alone or in
combination with any affiliate (as defined in the Securities and Exchange Act of
1934 as amended and all regulations promulgated pursuant thereto, (the "Exchange
Act")) become the beneficial owner (as defined in Rules 13(d)-3 and 13(d)-5
under the Exchange Act) of fifty percent (50%) or more of any outstanding class
of capital stock of the Corporation having ordinary voting power in the election
of its directors; or (iv) Mestek and Xxxx collectively shall cease to own
capital stock of the Corporation with total voting power in the election of its
directors of fifteen percent (15%) or more.
8. ADJUSTMENTS FOR SPLITS, RECLASSIFICATIONS, ETC. In the event that the
Corporation at any time or from time to time after the date hereof shall effect
a subdivision of the outstanding shares of the Corporation's common stock
("Common Stock") into a greater number of shares of Common Stock (by stock
split, reclassification or otherwise), or in the event the outstanding shares of
Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, then the total number
of shares of Series E Stock to be owned by Grantee shall be increased or
decreased proportionately. The Corporation will take all required corporate
actions, including increasing the number of shares of authorized Series E Stock,
as necessary, to effectuate the provisions of this Section 8.
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9. CLOSING CONDITIONS. The issuance of the Shares by the Corporation to
Grantee as contemplated by this Agreement is subject to the satisfaction of the
following closing conditions:
(a) the execution of an employment offer letter by Grantee and the
Corporation ("Offer Letter");
(b) the filing with the Secretary of State of Delaware of the
Certificate of Designations, Preferences and Rights of Series E Preferred Stock
of CareCentric, Inc. ("Certificate of Designations");
(c) approval of the Certificate of Designations, Offer Letter and the
transactions contemplated by this Agreement by the Corporation's Board of
Directors;
(d) written consent of Mestek and Xxxx to the transactions
contemplated by this Agreement;
(e) filing of a listing notice for the Shares with Nasdaq and payment
by the Corporation of all required filing fees in connection therewith; and
(f) such other actions as may be required by the Corporation and
Grantee in order to comply with applicable law.
10. MISCELLANEOUS.
10.1 GOVERNING LAW. This Agreement and all rights and obligations of
the parties hereto shall be governed, construed and interpreted in accordance
with the laws of the State of Georgia without giving effect to principles of
conflicts of law.
10.2 MODIFICATIONS. No modification of or amendment to this Agreement,
nor any waiver or any rights under this Agreement, shall be effective unless in
writing signed by the parties to this Agreement. The failure by either party to
enforce any rights under this Agreement shall not be construed as a waiver of
any rights of such party.
10.3 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of the Agreement shall be enforceable in accordance with its terms.
10.4 CONSTRUCTION. This Agreement is the result of negotiations
between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product
of all of the parties hereto, and no ambiguity shall be construed in favor of or
against any one of the parties hereto.
10.5 NOTICES. Any notice required or permitted by this Agreement shall
be in writing and shall be deemed sufficient when delivered personally or sent
by telegram or fax or 72 hours after being deposited in the U.S. mail, as
certified or registered mail, with postage prepaid, and addressed to the party
to be notified at the address set forth in the signature pages below or as
subsequently modified by written notice.
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10.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
10.7 SUCCESSORS AND ASSIGNS. The rights and benefits of this Agreement
shall inure to the benefit of, and be enforceable by the Corporation's
successors and assigns. The rights and obligations of Grantee under this
Agreement may only be assigned with the prior written consent of the
Corporation.
[Signatures begin on next page]
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GRANTEE: XXXX X. XXXXX
Signature: /s/ Xxxx X. Xxxxx
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Print Full Name: Xxxx X. Xxxxx
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Address: 0000 Xx. Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Social Security No.:
---------------------------------
Telephone No.:
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CARECENTRIC, INC.
By: /s/ X.X. Xxxxx
----------------------------------------
Title: Vice Chairman
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Address of Corporation:
0000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
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ACKNOWLEDGMENT AND STATEMENT OF DECISION
REGARDING SECTION 83(B) ELECTION
The undersigned, a grantee of securities ("Shares") of CareCentric, Inc., a
Delaware corporation (the "Corporation") by a Stock Grant Agreement that
includes terms and provisions relating to a repurchase option of the
Corporation, hereby states as follows:
1. The undersigned either [CHECK AND COMPLETE AS APPLICABLE]:
(a) [____] has consulted, and has been fully advised by, the
undersigned's own tax advisor, _________________________________________, whose
business address is ________________________________________, and phone number
is ___________________, regarding the federal, state and local tax consequences
of being granted the Shares, and particularly regarding the advisability of
making elections pursuant to Section 83(b) of the Internal Revenue Code of 1986,
as amended (the "Code") and pursuant to the corresponding provisions, if any, of
applicable state law; or
(b) [____] has knowingly chosen not to consult such a tax advisor.
2. The undersigned hereby states that the undersigned has decided [CHECK AS
APPLICABLE]:
(a) [____] to make an election pursuant to Section 83(b) of the Code,
and is submitting to the Corporation, an executed form entitled "Election Under
Section 83(b) of the Internal Revenue Code of 1986"; or
(b) [____] not to make an election pursuant to Section 83(b) of the
Code.
3. Neither the Corporation nor any representative of the Corporation has
made any representation or warranty to the undersigned with respect to the tax
consequences of the undersigned's purchase of shares under the Stock Grant
Agreement or of the making or failure to make an election pursuant to Section
83(b) of the Code or the corresponding provisions, if any, of applicable state
law.
"GRANTEE":
Enter Date:
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Xxxx X. Xxxxx
10
ELECTION UNDER SECTION 83(B)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer elects, pursuant to Section 83(b) of the Internal
Revenue Code, to include in taxpayer's gross income or alternative minimum
taxable income, as applicable, for the current taxable year, the amount of any
income that may be taxable to taxpayer in connection with taxpayer's receipt of
the property described below:
1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:
NAME OF TAXPAYER: Xxxx X. Xxxxx
ADDRESS: 0000 Xx. Xxxxx Xxxx, Xxxxxxx, Xxxxxxx 00000
IDENTIFICATION NO. OF TAXPAYER: __________________________________________
TAXABLE YEAR: 2002
2. The property with respect to which the election is made is described as
follows: 210,000 shares of the Series E Preferred Stock of CareCentric,
Inc., a Delaware corporation (the "Corporation"). -----------
3. The date on which the property was transferred is: January 23, 2002.
4. The property is subject to the following restrictions: vesting and
forfeitability conditions as described in Stock Grant Agreement dated
January 23, 2002.
5. The fair market value at the time of transfer to taxpayer, determined
without regard to any restriction other than a restriction which by its
terms will never lapse, of such property was: $ -0-.
6. The amount paid for such property: $ -0-.
The undersigned has submitted a copy of this statement to the party for whom the
services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property. The
undersigned understands that the foregoing election may not be revoked except
with the consent of the Commissioner.
"GRANTEE":
Enter Date:
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Xxxx X. Xxxxx
Exhibit A
Goals relating to Forfeitability Conditions
1408410v5
