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Exhibit 10.10
RESTRICTED STOCK AGREEMENT
RESTRICTED STOCK AGREEMENT dated as of December 19, 1995 among NEW AMERICAN
HEALTHCARE CORPORATION, a Tennessee corporation (the "Company"), WELSH, CARSON,
XXXXXXXX & XXXXX VII, L.P., a Delaware limited partnership ("WCAS VII"), the
several other investors named in Annex I hereto (collectively with WCAS VII, the
"Purchasers"), and the several individuals named in Annex II hereto
(individually, a "Founder" and collectively, the "Founders").
WHEREAS, pursuant to a Securities Purchase Agreement dated as of December
19, 1995 (the "Purchase Agreement") among the Company, the Purchasers and the
Founders, the Company (i) proposes to issue and sell to the Purchasers and the
Founders on the date hereof an aggregate 5,026,500 shares of Common Stock, $0.01
par value ("Common Stock"), of the Company and (ii) subject to the provisions of
the Purchase Agreement, may issue and sell to the Purchasers and Founders up to
(A) an aggregate 250,000 shares of Series A Non-Convertible Cumulative Preferred
Stock (the "Series A Preferred Stock") and (B) an aggregate 235,000 shares of
Series B Convertible Preferred Stock (the "Series B Preferred Stock"), in each
case during the five-year period after the date hereof;
WHEREAS, on the date hereof and prior to any additional purchases of
securities to be made by such Founders on the date hereof pursuant to the
Purchase Agreement, the Founders own the number of shares of Common Stock set
opposite their respective names in Annex II hereto under the heading "Number of
Restricted Shares", being 2,800,000 shares in the aggregate; and
WHEREAS, the Purchasers are willing to consummate the initial purchase and
any subsequent purchase contemplated to be made by them pursuant to the Purchase
Agreement on the terms and subject to the conditions set forth therein if, and
only if, each of the Founders covenants and agrees to subject the number of
shares of Common Stock owned by him as of the date hereof and set opposite his
name in Annex II hereto under the heading "Number of Restricted Shares" to
certain restrictions, including without limitation that such shares of Common
Stock be subject to repurchase by the Company under certain circumstances, all
as provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereby agree as follows:
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I.
SHARES OF COMMON STOCK SUBJECT TO REPURCHASE
SECTION A. Agreement to Restrict. Each Founder hereby agrees to subject,
and does hereby subject, all shares of Common Stock owned by him on the date
hereof, the number of which is set opposite his name in Annex II hereto under
the heading "Number of Restricted Shares", to the provisions of this Restricted
Stock Agreement (said shares, in the case of each Founder, being herein called
his "Restricted Shares" and all said shares of all Founders collectively being
herein called the "Restricted Shares").
SECTION B. Vested and Unvested Shares. The Restricted Shares of each
Founder as of any date, less any of the same which, as of such date, shall have
become vested with respect to such Founder as provided in Sections 1.03 and 1.04
below, are hereinafter referred to as of such date as "Unvested Shares", and any
Restricted Shares which, as of any date, shall have become vested with respect
to such Founder as provided in Sections 1.03 and 1.04 below, are hereinafter
collectively referred to as of such date as "Vested Shares". The Unvested Shares
held by any Founder from time to time shall be subject to the repurchase rights
of the Company as set forth in Section 1.05 below. All Shares purchased by the
Founders pursuant to the Securities Purchase Agreement dated December 19, 1995
between the Company, the Founders, and the Purchasers and, unless otherwise
specifically noted on such certificates and by an amendment hereto, all shares
hereafter purchased by the Founders, shall be considered Vested Shares not
subject to the provisions of this Agreement.
SECTION C. Ordinary Vesting. Except as otherwise provided in Sections 1.04
and 1.05 below, 1/48 of each Founder's Restricted Shares shall vest on the last
day of each calendar month commencing after August 28, 1995 with respect to
Messrs. Martin, McLendon, Xxxxxx and Hill, and, in connection with the person
who may, pursuant to Section 3.7 hereof, be treated as a Founder for purposes of
this Agreement, on the date such person purchases the shares of Common Stock
which are to be subject hereto.
SECTION D. Accelerated Vesting.
1. If a "Change of Control" (as hereinafter defined) shall occur then
concurrently with such Change of Control all Unvested Shares held by any Founder
whose employment with the Company shall not theretofore have ceased shall become
Vested Shares.
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2. For purposes of this Agreement, a "Change of Control" means:
a. a transaction whereby the Company shall merge or consolidate with
or into another entity (other than the consolidation or merger of a
wholly-owned subsidiary with or into the Company and other than a merger
involving the Company in which holders of at least 51% of the outstanding
Common Stock, on a fully diluted basis, immediately prior to such merger or
consolidation hold at least 51% of the Common Stock, on a fully diluted
basis, immediately thereafter, in substantially the same proportions);
b. the sale or other disposition by WCAS in a single transaction or a
series of transactions, of shares of outstanding Common Stock, or
securities convertible into Common Stock of the Company of at least 33 1/3%
of the outstanding Common Stock, on a fully diluted basis, calculated
immediately prior to such a sale or other disposition; or
c. a sale of all or substantially all of the properties and assets of
the Company.
SECTION E. Right of Repurchase of Unvested Shares Upon Termination of
Employment.
1. Each Founder agrees with the Company and the Purchasers that upon
the termination of such Founder's employment with the Company for any reason,
(i) no further Restricted Shares of such Founder shall, unless so provided in
Section 1.05(c), thereafter become Vested Shares and (ii) the Company shall
thereupon have the right and option, but not the obligation, on the terms set
forth in this Section 1.05, to purchase from such Founder that Founder's
Unvested Shares; provided, however, that if such Founder's employment with the
Company is terminated for any of the reasons set forth in Section 7(a)(iv) of
such Founder's Employment Agreement with the Company, whether before or after
the scheduled expiration date of the Employment Term (as defined in the
Employment Agreement), then the Company shall only be entitled to repurchase,
the lesser of (i) the number of Unvested Shares as of the last day in the
calendar month in which the Founder's employment with the Company is terminated
or (ii) the number of such Founder's Unvested Shares equal to the percentage set
forth below opposite such Founder's name of the total original number of such
Founder's Restricted Shares:
Xxxxxx X. Xxxxxx: 50.0%
Xxxx X. XxXxxxxx, Xx.: 50.0%
Xxxxx X. Xxxxxx: 65.0%
Xxxxxxx X. Xxxx: 80.0%
Any additional person
treated pursuant to
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Section 3.7 hereof
as a Founder: 85.0%
The Unvested Shares of a Founder which become purchasable by the Company
pursuant to this Section 1.05 are herein sometimes referred to as "Repurchase
Shares". The purchase price to be paid for Repurchase Shares (the "Repurchase
Price") under this Section 1.05 shall be the price such Founder paid for such
Repurchase Shares at the time he acquired such shares from the Company.
Notwithstanding the foregoing, if (i) Xxxxx X. Xxxxxx'x Employment Term (as such
term is defined in his Executive Employment Agreement with the Company dated as
of the date hereof) does not commence by February 1, 1996 or (ii) Xxxxxxx X.
Xxxx'x Employment Term (as such term is defined in his Executive Employment
Agreement with the Company dated as of the date hereof) does not commence by
March 1, 1996, then the Company shall be entitled, at its option, to purchase
all of Xx. Xxxxxx'x or Xx. Xxxx'x, as the case may be, Restricted Shares,
whether or not any have theretofore become Vested Shares, at the Repurchase
Price, together with all Shares of capital stock of the Company purchased by Xx.
Xxxxxx or Xx. Xxxx, as the case may be, pursuant to the Purchase Agreement at
the price paid therefor.
If after the date hereof any subdivision or combination of the shares of
Common Stock of the Company shall have occurred or any dividend or other
distribution upon the shares of Common Stock payable in Common Stock or in
options to purchase Common Stock or securities convertible into Common Stock
shall have been made or declared, then (i) all shares issued or issuable to a
Founder in connection therewith in respect of shares which constitute Unvested
Shares shall become Restricted Shares and shall be treated as part of the total
original number of Restricted Shares held by such Founder and (ii) the purchase
price payable by the Company thereafter pursuant to this Section 1.05 for each
Unvested Share shall be a price obtained by dividing the aggregate purchase
price for all Unvested Shares prior to such event by the total number of
Unvested Shares existing immediately after the occurrence of such event.
2. Each Founder agrees with the Company and the Purchasers that upon any
transfer of the Unvested Shares in violation of this Agreement, either willfully
or by operation of law, the Company shall thereupon have the right and option,
but not the obligation, on the terms set forth in this Section 1.05, to purchase
from such Founder or its transferee all of the Unvested Shares held by such
person at the Repurchase Price (such Unvested Shares to be designated for
purchase by the Company under this Section 1.05 are sometimes referred to as
"Repurchase Shares").
3. Within sixty (60) days after the occurrence of any event specified in
subsection (a) above or within sixty (60) days
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after the Company obtains knowledge of the occurrence of an event specified in
subsection (b) above, the Company shall give such Founder (or, in the case of a
transfer, such Founder's transferee) written notice of the Company's election to
exercise its right to purchase any Unvested Shares held by such Founder (or
transferee) under this Section 1.05 and the number of Unvested Shares the
Company elects to purchase. The closing for the purchase by the Company of any
such Unvested Shares pursuant to the provisions of this Section 1.05 will take
place at the offices of the Company on the date specified in such written
notice, which date shall be a business day not later than 30 days after the date
such notice is given. At such closing, such Founder shall deliver the Repurchase
Shares to the Company, duly endorsed for transfer, against payment of the
purchase price therefor. Such purchase price shall be payable to the Founder by
certified or cashier's check payable to his order. To the extent the Company
chooses not to exercise such right and option under this Section 1.05 to
repurchase any Unvested Shares from a Founder (unless such decision is made
because the Company is at the time prevented from repurchasing such shares under
applicable law, in which event no Unvested Shares shall continue to vest
pursuant to Section 1.03 until such date, if any, that is 90 days after the date
on which the Company determines that it shall be able to exercise its rights
under this Section 1.05 and the Company shall be entitled to exercise its rights
hereunder until such date) all Unvested Shares of such Founder shall become
Vested Shares. Any decision pursuant to this Section 1.05(c) to repurchase or
not to repurchase shares shall be made by a majority of the members of the Board
of Directors excluding any Founder Stockholders Designees (as defined in the
Stockholders Agreement, dated December 19, 1995, among the Company and the
several parties named in Schedule I and II thereto).
SECTION F. Rights as a Stockholder. Subject to the provisions of Sections
1.03, 1.04, 1.05 and 1.07 hereof, each Founder will have all rights of a
stockholder with respect to all Common Shares held by him, including the right
to vote such Common Shares and to receive any dividends paid thereon.
SECTION G. Transfer Restrictions on Restricted Shares. Notwithstanding
anything contained in this Agreement to the contrary, each Founder agrees with
the Company that such Founder will not sell, assign, transfer, pledge, convey or
otherwise dispose of any Unvested Shares, or subject the same to any lien,
encumbrance, mortgage or other security interest of any kind whatsoever, prior
to the date on which such Unvested Shares become Vested Shares as provided in
this Agreement.
SECTION H. Recording of Assignments. The Company shall not record any
assignment, transfer or other disposition of any Restricted Shares on its
transfer books unless the provisions of
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this Agreement shall have been fully complied with and the Company shall have
received satisfactory evidence thereof.
SECTION I. Legend on Stock Certificates. Each stock certificate
representing Restricted Shares held by each Founder shall be conspicuously
endorsed with the following legend:
THE RIGHTS OF THE HOLDER OF THE SHARES EVIDENCED BY THIS CERTIFICATE
ARE SUBJECT TO AND LIMITED BY THE TERMS AND CONDITIONS OF A CERTAIN
RESTRICTED STOCK AGREEMENT DATED AS OF DECEMBER 19, 1995 AMONG NEW
AMERICAN HEALTHCARE CORPORATION, CERTAIN OTHER PARTIES AND THE ORIGINAL
HOLDER OF SUCH SHARES. A COPY OF SAID AGREEMENT, TO WHICH REFERENCE IS
HEREBY MADE, IS ON FILE AND MAY BE EXAMINED AT THE OFFICES OF NEW
AMERICAN HEALTHCARE CORPORATION.
Whenever any Restricted Shares held by any Founder become Vested Shares under
this Agreement, such Founder shall be entitled to receive from the Company a new
stock certificate evidencing such newly Vested Shares without the restrictive
legend set forth above and such certificate shall be delivered to such Founder.
Each stock certificate representing Restricted Shares shall also bear the
legends provided for in the Stockholders Agreement and in the Registration
Rights Agreement.
SECTION J. Applicability of Stockholders Agreement. The terms and
provisions of the Stockholders Agreement dated as of the date hereof among the
Company, the Purchasers and the Founders shall also apply to the Restricted
Shares, provided that in the event of any conflict between the provisions hereof
and thereof, the provisions hereof shall govern.
II.
REPRESENTATIONS AND WARRANTIES OF THE FOUNDERS
Each Founder, severally and not jointly, represents and warrants to the
Company as follows:
SECTION A. Authorization. The execution, delivery and performance by such
Founder of this Agreement will not violate any provision of law, any order of
any court or other agency of government, or any provision of any indenture,
agreement or other instrument by which such Founder or any of such Founder's
properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the properties or assets of such Founder.
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SECTION B. Validity. This Agreement has been duly executed and
delivered by such Founder and constitutes the legal, valid and binding
obligation of such Founder, enforceable in accordance with its terms, subject,
as to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws from time to time in effect
affecting the enforcement of creditors' rights generally and to general equity
principles.
SECTION C. Title to Common Shares. The transfer and delivery by such
Founder of any Restricted Shares repurchased by the Company from such Founder in
accordance with Section 1.05 above will transfer valid title thereto to the
Company, free and clear of any liens, claims, security interests or other
encumbrances whatsoever.
III.
MISCELLANEOUS
SECTION A. Expenses, Etc. The parties hereto shall pay all of their own
expenses relating to the transactions contemplated by this Agreement, whether or
not such transactions shall be consummated, except that the Company shall pay
the expenses of the Founders incurred in connection with the preparation,
execution and delivery of this Agreement.
SECTION B. Notices. All notices which are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and (i) delivered personally,
(ii) mailed by certified or registered mail, return receipt requested and
postage prepaid, (iii) sent via a nationally recognized overnight courier or
(iv) sent via facsimile confirmed in writing to the recipient, in each case as
follows:
1. if to the Company, at
000 Xxxx Xxxxxx
Xxxxx X-00
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx
Telecopy No. (000) 000-0000
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with a copy to:
Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, P.C.
1800 First American Center
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, XX, Esq.
Telecopy No. (000) 000-0000
2. if to any Purchaser, at
Welsh, Carson, Xxxxxxxx & Xxxxx VII, L.P.
One World Financial Center
000 Xxxxxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Telecopy No. (000) 000-0000
with a copy to:
Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No. (000) 000-0000
3. if to any Founder, to such person at his address
appearing on the stock transfer records of the Company;
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
SECTION C. Entire Agreement; Modifications. This Agreement
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes all previous agreements between one or more
Founders and the Company, including, without limitation, a Shareholders'
Agreement, dated August 28, 1995, by and among Xxxxxx X. Xxxxxx, Xxxx X.
XxXxxxxx, Xx., Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxx and the several shareholders
named on the Shareholder Exhibits attached thereto, an Employment Agreement,
dated October 15, 1995, between the Company and Xxxxxx X. Xxxxxx, an Employment
Agreement, dated October 15, 1995, between the Company and Xxxx X. XxXxxxxx,
Xx., an Employment Agreement, dated October 15, 1995, between the Company and
Xxxxx X. Xxxxxx, an Employment Agreement, dated October 15, 1995, between the
Company and Xxxxxxx X. Xxxx, a Noncompetition Agreement, dated October 15, 1995,
between the Company and Xxxx X. XxXxxxxx, Xx., a Noncompetition Agreement, dated
October 15, 1995, between the Company and Xxxxx X. Xxxxxx, and a Noncompetition
Agreement, dated October 15, 1995, between the Company and Xxxxxxx X. Xxxx. This
Agreement may not be amended or
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modified nor any provisions waived except in a writing signed by the parties
hereto.
SECTION D. Assignment. Neither this Agreement nor any of the parties'
rights and obligations hereunder shall be assignable by either party hereto
without the prior written consent of the other parties hereto.
SECTION E. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
SECTION F. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Tennessee.
SECTION G. Additional Person to be Treated as a Founder. It is intended
that one additional person, who may purchase up to 200,000 shares of Common
Stock from the Company at $.30 per share at the time of such person's employment
with the Company, may become an executive officer of the Company as Vice
President of Acquisitions and Development. As a condition to such purchase of
shares, such person shall execute and deliver to the Company a counterpart of
this Agreement, whereupon such person shall, for all purposes hereof, become a
"Founder" and the shares so purchased shall become "Restricted Shares."
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IN WITNESS WHEREOF, the Company, the Founders and the Purchasers have
executed this Restricted Stock Agreement as of the day and year first above
written.
NEW AMERICAN HEALTHCARE CORPORATION
By
-----------------------------------------
Xxxxxx X. Xxxxxx
Chairman, President and CEO
PURCHASERS:
WELSH, CARSON, XXXXXXXX & XXXXX VII, L.P.
By WCAS VII Partners, General Partner
By
-----------------------------------------
General Partner
WCAS Healthcare Partners, L.P.
By WCAS HP Partners, General Partner
By
-----------------------------------------
General Partner
-------------------------------------------
Xxxxxxx X. Xxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxx
-------------------------------------------
Xxxxx X. Xxxxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxx
-------------------------------------------
Xxxxxx X. Xxxx
-------------------------------------------
Xxxxxx X. XxXxxxxxx
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-------------------------------------------
Xxxxx XxxXxxxx
-------------------------------------------
Xxxxx X. Xxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxxxxx
-------------------------------------------
Xxxxxxx X. xx Xxxxxx
XXXXX X. XXXXXX - TRUSTEE
PROFIT SHARING PLAN DLJSC -
CUSTODIAN FBO XXXXX X. XXXXXX
By
-----------------------------------------
HORIZON INVESTMENTS ASSOCIATES, I
By
-----------------------------------------
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FOUNDERS:
-------------------------------------------
Xxxxxx X. Xxxxxx
-------------------------------------------
Xxxx X. XxXxxxxx, Xx.
-------------------------------------------
Xxxxx X. Xxxxxx
-------------------------------------------
Xxxxxxx X. Xxxx
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ANNEX I
Purchasers
Name and Address
----------------
Welsh, Xxxxxx Xxxxxxxx
& Xxxxx VII, L.P.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
WCAS Healthcare Partners, L.P.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxx
Xxxxxx X. XxXxxxxxx
Xxxxx XxxXxxxx
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. xx Xxxxxx
In care of
WCAS Management Corporation
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxx X. Xxxxxx - Trustee
Profit Sharing Plan DLJSC-Custodian
FBO Xxxxx X. Xxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
copy to:
Xx. Xxxxxx Xxxxxxx
Sales Associate
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Investment Services Group
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
HORIZON INVESTMENTS ASSOCIATES, I
c/o X.X. Xxxxxxxx
Continental Medical Systems, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
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ANNEX II
Founders
Number of
Name and Address Restricted Shares
---------------- -----------------
Xxxxxx X. Xxxxxx
000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000 1,479,000
Xxxx X. XxXxxxxx, Xx.
Xxx Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000 677,000
Xxxxx X. Xxxxxx
00000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000 392,000
Xxxxxxx X. Xxxx
000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000 252,000
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TOTAL 2,800,000
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Pursuant to the provisions of Article III, Section G of that certain
Restricted Stock Agreement dated December 19, 1995 among New American Healthcare
Corporation, (the "Company") Welsh, Xxxxxx Xxxxxxxx & Xxxxx VII, L.P. ("WCAS
VII"), the several other investors named in Annex I thereto (the "Purchasers")
and the several individuals named in Annex II thereto (the "Founders") (the
"Restricted Stock Agreement"), the undersigned hereby becomes a party to the
Restricted Stock Agreement as a Founder and agrees to be bound by such agreement
as if a party to the original Restricted Stock Agreement.
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Xxxx X. XxXxxx
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REVISED
ANNEX II
Founders
Number of
Name and Address Restricted Shares
---------------- -----------------
Xxxxxx X. Xxxxxx
000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000 1,479,000
Xxxx X. XxXxxxxx, Xx.
Xxx Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000 677,000
Xxxxx X. Xxxxxx
00000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000 392,000
Xxxxxxx X. Xxxx
000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000 252,000
Xxxx X. XxXxxx
000 Xxxxxxxx Xx.
Xxxxxxxx, XX 00000 200,000
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TOTAL 3,000,000
