1
EXHIBIT 10.4
MEDAPHIS CORPORATION
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT ("Agreement") is made as of the 26th
day of June, 1996, by and between MEDAPHIS CORPORATION, a corporation organized
and doing business under the laws of the State of Delaware (the "Company"), and
XXXXXXX X. XXXXXXX (the "Recipient").
W I T N E S S E T H:
WHEREAS, the Recipient will be the Vice Chairman and Chief Operating
Officer of the Company and, as such, will be responsible for the overall
successful operations of the Company and its subsidiaries;
WHEREAS, in order to advance the interests of the Company by
stimulating the efforts of the Recipient and encouraging the Recipient to
continue his employment with the Company, the Board of Directors of the Company
has awarded to the Recipient a certain number of shares of voting common stock,
par value $.01 per share (the "Common Stock"), of the Company (the "Award"),
subject to the payment by the Recipient to the Company in cash of the aggregate
par value of the shares covered by the Award and to the restrictions contained
in this Agreement; and
WHEREAS, the Company and the Recipient wish to confirm the terms and
conditions of the Award.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, it is hereby agreed between the parties hereto as follows:
1. Grant of Award. Upon and subject to the terms, restrictions,
limitations, and conditions stated herein, the Company hereby grants to the
Recipient an Award of 50,000 shares of Common Stock (the "Shares"), effective
as of the date first written above.
2. Terms and Conditions of Award. The Award shall be subject to the
following terms and conditions:
(a) Restrictions; Vesting. The Shares shall remain restricted
and subject to the transfer and other restrictions set forth in
Section 5 hereof unless and until such Shares vest and become
nonforfeitable hereunder. The Shares shall vest and become
nonforfeitable hereunder upon the occurrence of both of the following
events: (i) reporting by the Company of net income per share of at
least $1.00 for a fiscal year, and (ii) the vesting under the Medaphis
Corporation Re-Engineering, Consolidation and Business Improvement
Cash Incentive Plan dated February 21, 1996 of the awards granted
pursuant to such plan in
2
accordance with the terms of such plan. The Recipient acknowledges and
agrees that the Compensation Committee of the Board of Directors (the
"Committee") shall have the authority to change, adjust or modify the
vesting provisions of this Section 2(a) subsequent to the date hereof
in any manner deemed equitable by the Committee to reflect changes in
the Company's financial condition, results of operation, capital
structure or other matters which occur subsequent to the date hereof,
and all such changes, adjustments or modifications effected by the
Committee under this Section 2(a) shall be final, conclusive and
binding on the Recipient.
(b) Restricted Shares; Certificates. Upon grant of the Award
evidenced hereby and payment of the applicable purchase price pursuant
to Section 2(e) hereof, a certificate in respect of the Shares shall
be issued to reflect the Shares underlying the Award. Such certificate
shall be registered in the name of the Recipient and shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to the Award. The Recipient hereby agrees not to dispose of
the Shares in violation of this Agreement and any attempt to dispose
of Shares in contravention of the terms, conditions and restrictions
of this Agreement shall be ineffective. The certificate for Shares
shall be subject to such transfer orders and other restrictions as the
Committee may deem advisable under this Agreement, the rules,
regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Common Stock is listed
and any applicable federal or state securities law. The Committee
shall cause a legend to be put on any such certificate substantially
in the following form:
"THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF
COMMON STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS
AND CONDITIONS (INCLUDING FORFEITURE) OF AN AGREEMENT
ENTERED INTO BETWEEN THE REGISTERED OWNER HEREOF AND
MEDAPHIS CORPORATION. A COPY OF SUCH AGREEMENT IS ON FILE
IN THE OFFICES OF MEDAPHIS CORPORATION."
(c) Vested Shares; Reissued Certificates. Upon the vesting of
the Shares pursuant to the terms of this Agreement, the Recipient may
present, or request the presentation of, the restricted certificate to
the Company for reissuance of a certificate which reflects that number
of Shares held free and clear of the restrictions set forth in this
Agreement other than those imposed by law.
(d) Custody. The Recipient acknowledges and agrees that the
certificate evidencing Shares which are restricted may be held in
custody by a bank or other institution or that the Company may itself
hold such certificate in custody until such Shares shall vest and
become nonforfeitable hereunder, and the Recipient agrees, upon the
request of the Company, to deliver a stock power endorsed in blank
relating to the Shares.
- 2 -
3
(e) Payment. The Recipient shall pay to the Company in cash
the sum of $500.00 as consideration for the Shares.
3. Termination of Employment. In the event of the termination of the
Recipient's employment by the Company or any parent or subsidiary corporation
of the Company or termination of the Employee's Employment Agreement with the
Company dated the date hereof (the "Employment Agreement"), the Shares which
have not yet become vested and nonforfeitable hereunder shall be forfeited to
the Company and the consideration paid by the Recipient with respect to such
forfeited Shares pursuant to Section 2(e) hereof shall be repaid by the Company
to the Recipient without any interest being paid thereon; provided, however,
that in the event of termination of the Recipient's employment by the Company
or any parent or subsidiary corporation of the Company by reason of total and
permanent disability (within the meaning of Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended (the "Code")) or death, all Shares shall
thereupon vest and become nonforfeitable, so that such Recipient or his assigns
or beneficiaries shall be entitled to retain the number of Shares subject to
the Award; and provided, further, however, that in the event of termination of
the Recipient's Employment Agreement solely because the Recipient desired to
renew such Employment Agreement pursuant to the terms thereof but the Company
did not so desire, and in the event the Company reported net income per share
of at least $.83 for any fiscal year ending prior to the date of such
termination of the Employment Agreement, then the Shares which have not yet
become vested and nonforfeitable hereunder shall not be forfeited to the
Company until June 26, 1999, unless such Shares otherwise become vested and
nonforfeitable prior to such date pursuant to the terms of Section 2(a) hereof.
4. Shares Subject to Agreement.
(a) Change in Control Events. For purposes of this Agreement,
"Change in Control" shall be defined as: (1) the adoption of a plan of
merger or consolidation of the Company with any other corporation as a
result of which the holders of the outstanding voting stock of the
Company as a group would receive less than fifty percent (50%) of the
voting stock of the surviving or resulting corporation; (2) the
adoption of a plan of liquidation or the approval of the dissolution
of the Company; or (3) the sale or transfer of substantially all of
the assets of the Company.
(b) The Company. In the event of a Change in Control event
described in Section 4(a)(1), (2), or (3) hereof, all Shares
underlying the Award shall become fully vested and nonforfeitable on
the date immediately preceding the effective date of the transaction
contemplated by Section 4(a)(1), (2) or (3), as applicable.
(c) Liquidation of Shares After Change of Control. Upon the
occurrence of any event described in Section 4(b) hereof, the
Recipient shall have the right in connection with the closing or other
consummation of such event either to (i) sell to the Company, or the
surviving or resulting corporation, the Shares received under the
Award at a cash price per
- 3 -
4
Share equal to the then Fair Market Value (as hereinafter defined) of
the Common Stock, or (ii) receive the number and class of shares of
stock or other securities or any other property to which the terms of
the agreement of merger, consolidation, reorganization or other
corporate transaction would entitle the Recipient to receive as the
holder of record of the number of Shares underlying the Award;
provided, however, that in the event the transaction contemplated by
Section 4(b) involves a merger to be accounted for under the "pooling
of interests" accounting method, then the Committee shall have the
authority hereunder to modify the rights of Recipient under this
Section 4(c) to the extent necessary in order to preserve the "pooling
of interests" accounting treatment for such merger. For purposes of
this Agreement, "Fair Market Value" shall mean (1) the closing price
on a specified date for a share of Common Stock as reported by The
Wall Street Journal under the Nasdaq National Market quotation system
(or under any successor quotation system) or, if the Common Stock is
not traded on the Nasdaq National Market, under the stock exchange or
quotation system under which such closing price is reported or, (2) if
The Wall Street Journal does not report such closing price, such
closing price as reported by a newspaper or trade journal selected by
the Committee or, (3) if no such closing price is available on such
date, such closing price as so reported or so quoted in accordance
with Section 4(c)(i) for the immediately preceding business day, or
(4) if no newspaper or trade journal reports such closing price or if
no such price quotation is available, the price at which the Committee
acting in good faith determines through any reasonable valuation
method that a share of Common Stock might change hands between a
willing buyer and a willing seller, neither being under any compulsion
to buy or to sell and both having reasonable knowledge of the relevant
facts.
5. Restrictions on Transfer. The Recipient agrees that the Shares
shall be restricted and nontransferable and shall not be sold, exchanged,
transferred, hypothecated or otherwise disposed of at any time prior to their
vesting in accordance with Sections 2(a), 3, or 4(b) hereof.
6. Rights as a Stockholder. Upon payment for the Shares pursuant to
Section 2(e) hereof and issuance of a certificate pursuant to Section 2(b)
hereof, the Recipient shall have rights as a stockholder of the Company with
respect to the Shares covered by the Award (regardless of whether such Shares
have become vested and nonforfeitable hereunder) to: (a) receive dividends in
cash or other property or other distributions or rights in respect of the
Shares (except that shares of Common Stock issued in order to effect a stock
split or any other securities issued in respect of Shares which have not yet
vested and become nonforfeitable hereunder shall be restricted on the same
terms underlying the Shares); and (b) vote the Shares as the record owner
thereof.
7. No Contract of Employment. The grant of the Award to the Recipient
under this Agreement shall not constitute a contract of employment and shall
not confer on the Recipient any rights upon the Recipient's termination of
employment in addition to those, if any, expressly set forth herein.
- 4 -
5
8. Tax Matters; Withholding. The Recipient understands and
acknowledges that unless the Recipient makes a timely election under Section
83(b) of the Code (a "Section 83(b) Election"), the fair market value of the
Shares will be treated as compensation income, subject to applicable
withholding and employment taxes, upon the vesting of such Shares. The
Recipient further acknowledges and understands that taxation of his
compensation income resulting from an Award (including the imposition of
applicable withholding and employment taxes) may be accelerated by the filing
of a Section 83(b) Election, but that filing such an election may be
undesirable if the Shares subsequently are forfeited under the vesting
restrictions set forth herein. The Recipient agrees that he will obtain
independent tax advice concerning the desirability of filing a Section 83(b)
Election with respect to the Award evidenced hereby. The Recipient may elect
(if he is not subject to the provisions of Section 16 of the Securities
Exchange Act of 1934, as amended, at the time of such election) to have
withheld from the Shares issuable in respect of an Award such number of Shares
equal to the amount necessary to satisfy any federal and state tax withholding
requirements which the Company, acting in its discretion, deems applicable to
such Award. If the Recipient does not so elect to have Shares withheld to
satisfy such tax withholding requirements, funds required to pay applicable
withholding taxes shall be obtained from other cash payments due to the
Recipient from the Company or from cash funds provided by the Recipient to the
Company; and the Company shall be authorized to retain custody (or to cause any
other custodian to retain custody) of the Shares until sufficient funds are
provided by the Recipient to the Company to pay all such withholding taxes.
9. The Committee. The Committee acting in its absolute discretion
shall exercise such powers and take such actions as are expressly called for
under this Agreement. Further, the Committee shall have the power to interpret
this Agreement and to take such other actions as the Committee deems equitable
under the circumstances, which action shall be binding upon the Company, the
Recipient and each other person directly or indirectly affected by such action.
No member of the Committee shall be liable for any action or determination made
in good faith with respect to this Agreement.
10. General Restrictions. If there is no registration statement
covering the Shares in effect under the Securities Act of 1933, as amended,
then notwithstanding anything contained herein to the contrary, no purported
transfer of such Shares shall be effective without the written opinion of
counsel to the Company that the Common Stock is being transferred in accordance
with the terms of an applicable exemption from the registration requirements of
applicable federal and state securities laws.
11. Governing Laws. This Agreement shall be construed, administered
and enforced according to the laws of the State of Georgia.
12. Successors. This Agreement shall be binding upon and inure to the
benefit of the heirs, legal representatives, successors and permitted assigns
of the parties.
- 5 -
6
13. Amendment. This Agreement may be amended by the Committee from
time to time to the extent that the Committee deems necessary or appropriate;
provided, however, the Committee may not effect any amendment to this Agreement
which would materially impair the rights of the Recipient hereunder without the
prior written consent of Recipient.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first set forth above.
MEDAPHIS CORPORATION
By: /s/ Xxxxxxxx X. Xxxxx
----------------------
ATTEST:
/s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Secretary
[CORPORATE SEAL]
RECIPIENT
/s/ Xxxxxxx X. Xxxxxxx(SEAL)
---------------------
Xxxxxxx X. Xxxxxxx
- 6 -
