Exhibit 10.20
SUBSCRIPTION AND RESTRICTION AGREEMENT
This Agreement is made and entered into this 5th day of
June, 1997, by ad between Nova Holdings, Inc. ("NHI") and Xxxx Xxxxxxxx
("Xxxxxxxx").
WITNESSETH
1. Subject to the closing of the sale of 100% of the outstanding
stock in Horizon Health Systems, Inc. to Nova Holdings, Inc. Nova
Holdings, Inc. will sell that number of shares of Common Capital Stock,
$.01 par value of Nova Holdings, Inc. that shall be determined by
dividing $250,000.00 by a per share price equal to that per share price
at which the Common Capital Stock $.01 par value is being sold to Xxx
Melcus, an outside party who will become a member of the Board of
Directors of NHI ("Shares"). In exchange for the sale of these Shares,
Xxxxxxxx will pay to NHI the cash sum of $250,000.00. It is also a
condition of this sale that the Shares be sold to Xxxxxxxx personally
and that Xxxxxxxx agree to the restrictions herein below.
2. The sale of the Shares by NHI shall take place within sixty
(60) days of the date of this letter.
3. Xxxxxxxx shall not transfer, sell, give, pledge, assign or
encumber the Shares to any person, entity, firm, corporation or
otherwise without the consent of NHI, and any such gift, transfer,
assignment or sale shall be null and void. If Xxxxxxxx receives a bona
fide offer to acquire the Shares, Xxxxxxxx shall first make the offer
to sell to NHI set out hereinbelow:
(a) Xxxxxxxx shall first offer in writing to sell the
Shares to NHI or to NHI's designee and shall attach to
said writing the name and address of the prospective
purchaser that has made the bona fide offer, the number
of Shares involved in the proposed transfer, and the
terms of such transfer. Within thirty days after
receipt of such offer, NHI or its designee, may at its
option, elect in writing to purchase the Shares, said
sale to be closed within thirty days of said
acceptance.
(b) The purchase price for the Shares to be purchased shall
be equal to the bona fide third party offer to purchase
the Shares. Closing of the purchase shall take place
at the principal office of NHI and the purchase price
shall be paid in the same manner and upon the same
terms as contained in the bona fide third party offer.
(c) If NHI declines to exercise its right to acquire the
shares within the thirty day period, Xxxxxxxx
shall be released from the restriction herein and may sell
the Shares to the third party identified to NHI upon the
terms set out in the bona fide third party offer
communicated to NHI provided that such sale shall close
within sixty days after the end of the thirty day
option period granted to NHI. In the event that such
sale does not close within said sixty day period, the
shares shall again become subject to the restriction
set out herein.
4. In the event of Xxxxxxxx'x death, his estate will sell the
Shares to NHI and NHI shall be required to buy such Shares from his
estate at a price equal to the fair market value of the stock as
determined in good faith by the Board of Directors of NHI. Such sale
shall close at the offices of NHI within 120 days after the opening of
the descendant's estate.
5. NHI will use reasonable efforts to xxxxx Xxxxxxxx registration
rights in the same manner as granted to those parties to the
Registration Rights Agreement dated May 31, 1996, a copy of which is
attached hereto. It is understood and agreed that NHI cannot grant
these rights without the written consent of the holders of 66 2/3% of
the Restricted Stock as defined in the Registration Rights Agreement
and NHI will use reasonable efforts to obtain the consent of holders of
66 2/3% of the Restricted Stock to allow Xxxxxxxx to obtain rights on
a parity with the rights of the holders of Restricted Stock granted
under the Registration Rights Agreement, subject only to the additional
restrictions set forth herein. The provisions of, and restrictions set
out in, Sections 3 and 4 shall no longer apply in the event of a public
offering of NHI Stock.
6. Xxxxxxxx hereby acknowledges that the Shares have not been
registered under the Securities Act of 1933 (the "Act") and that the Shares
cannot be resold unless they are registered under the Act or unless an exemption
from registration is available. Xxxxxxxx further recognizes that the Shares have
not been registered under the securities laws of any state, and may not be
resold unless an exemption from such registration is available. Xxxxxxxx
therefore recognizes that he must bear the economic risk of this investment
indefinitely. Xxxxxxxx further acknowledges that NHI has furnished him with all
requested information concerning NHI and its operations.
7. To induce NHI to issue the shares to Xxxxxxxx, Xxxxxxxx
represents and agrees that:
(a) He is acquiring the Shares for investment only and not with
a view to effecting a distribution of all or any part of the
Shares, as the phrase "Investment Only" and "Distribution"
have meaning under the Act;
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(b) He has no commitments which make a disposition of the Shares
likely and he intends to hold the shares indefinitely;
(c) He shall make no disposition of any of the Shares except in
accordance with (i) an effective registration statement
under the Act and any applicable state securities law and
prospectus then meeting the requirements of the Act and any
applicable state securities laws, or (ii) a writing
delivered to NHI in advance of the disposition describing a
proposed disposition which proposed disposition is, in the
opinion of counsel for NHI, as communicated to Xxxxxxxx in
writing, exempt from the registration requirements of the
Act and any applicable state securities laws;
(d) Any writing describing a proposed disposition shall be
accurate and shall not contain any untrue statement nor omit
any statement necessary to make the statements made not
false or misleading;
(e) He shall furnish NHI or its counsel all evidence reasonably
requested to substantiate any fact on which a claim to
exemption from the registration requirements of the Act and
any applicable state securities laws is based;
(f) In the event the restrictive legend referred to below is
removed from the certificates representing the Shares by NHI
in anticipation of a disposition free of the restrictions
contained herein, then at the request of NHI, Xxxxxxxx shall
submit the certificates for relegending in the event the
Shares are not disposed of as anticipated;
(g) No other person has any interest in this subscription or the
Shares and Xxxxxxxx is acquiring these shares for himself
only;
(h) Xxxxxxxx shall indemnify and hold harmless NHI, its officers
and directors, and each person controlling NHI, jointly or
severally, against any loss, liability, damage or expense
(including reasonable attorney fees) arising out of a breach
of any of the foregoing representations and agreements.
8. Xxxxxxxx agrees that the certificates representing the Shares
shall bear a legend to restrict their transferability under the Act to
circumstances permitted thereunder, and that NHI may refuse to permit
the transfer of the Shares unless the Shares are registered under the
Act and a prospectus meeting the requirements of the Act is then
available, or in the opinion of counsel for NHI, an exemption from
registration is available. Xxxxxxxx also agrees that certificates
representing the Shares shall bear a legend to restrict their
transferability pursuant to the requirements of this Agreement.
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9. Unless and until Xxxxxxxx is made a party to the Registration
Rights Agreement, Xxxxxxxx understands that (i) NHI is under no
obligation to register the Shares under the Act, but NHI may include
the Shares in any registration it may hereafter effect under the Act at
the Company's expense, and (ii) NHI is not required to file reports
under the Securities Exchange Act of 1934 or do anything which may be
of assistance to Xxxxxxxx in securing an exemption from the
registration requirements of the Act.
10. Xxxxxxxx understands the speculative nature of his investment
in the Shares and he represents that he has adequate means of providing
for his needs (including contingencies, without a return on or sale of
the Shares).
11. This Agreement shall be governed by Tennessee law.
12. This Agreement is binding upon and shall inure to the benefit
of the parties hereto and their respective successors, survivors, heirs
and assigns.
NOVA HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Title: CEO
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/s/ Xxxx X. Xxxxxxxx
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XXXX XXXXXXXX
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