EXHIBIT 10.23
ORTHODONTIC CENTERS OF AMERICA, INC.
1997 KEY EMPLOYEE STOCK PURCHASE PLAN
PARTICIPATION AGREEMENT
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THIS PARTICIPATION AGREEMENT ("Agreement") made as of November 3, 1997 (the
"Effective Date"), between ORTHODONTIC CENTERS OF AMERICA, INC., a Delaware
corporation (the "Company"), and XXXX X. XXXXXXX (the "Employee").
RECITALS:
WHEREAS, the Company adopted the 1997 Key Employee Stock Purchase Plan (the
"Plan") by vote of the Board of Directors as of October 31, 1997; and
WHEREAS, the Board of Directors has determined that it is to the advantage and
best interest of the Company and its stockholders to permit the Employee to
participate in the Plan and to enter into this Agreement, to encourage the
Employee to own shares of the Company's Common Stock, $.01 par value per share
(the "Common Stock"), as an inducement for the Employee to remain in the service
of the Company and its subsidiary corporations, and as an incentive for
increased effort during such service;
NOW, THEREFORE, in consideration of the mutual covenants contained in this
contract, the parties agree as follows:
1. Participation in the Plan. The Company hereby permits the Employee to
participate, and the Employee hereby elects to participate, in the Plan, subject
to all of the terms, conditions and provisions of the Plan and this Agreement.
2. Manner of Participation.
(a) Amount of Common Stock. Pursuant to the Plan, the Employee shall be
permitted to purchase, in the Company's currently pending underwritten public
offering of Common Stock (the "Public Offering") or from the Company, as
determined by the Company, shares of Common Stock with an aggregate value of up
to $799,992.50 (the "Shares"), which amount shall not exceed five (5) times the
Employee's current annual base salary. Such purchase must occur, if at all, on
or within thirty (30) days following the Effective Date, or the rights granted
in Section 1 and this Section shall terminate.
(b) Purchase Price. The purchase price per Share hereunder (the
"Purchase Price") shall equal, with respect to purchases in the Public Offering,
the public offering price set forth on the cover page of the final prospectus
filed by the Company pursuant to Rule 424(b) under the Securities Act of 1933
(the "1933 Act"), and thereafter, the reported last sale price per share of
Common Stock on the business day immediately preceding the date of purchase.
(c) Loan from the Company. The Company shall finance fifty percent (50%)
of the purchase price of the Shares through a loan from the Company. Such loan
shall be evidenced by a promissory note (the "Note"), in form and substance
acceptable to the Company, which indebtedness shall be a full recourse
obligation of the Employee, shall be secured by all of the Shares and shall bear
interest at the rate of six and one one-hundredth percent (6.01%) per
annum. The outstanding principal and accrued interest under the Note will be
payable, in one lump-sum payment, on the earlier of (i) November 3, 2002, or
(ii) termination of the Employee's employment with the Company; provided,
however, that a proportionate amount (equal to the amount by which the number of
Shares sold or transferred bears to the total number of Shares purchased) of the
outstanding principal and accrued interest under the Note shall be immediately
due and payable upon the sale or transfer of any of the Shares.
(d) Risk-Sharing. For so long as the Employee shall remain an employee
of the Company, the following provisions shall apply with respect to the Shares:
(i) The Employee shall be solely responsible for one hundred percent
(100%) of any losses occurring with respect to the sale or transfer by the
Employee of any of the Shares prior to the third anniversary of the Effective
Date.
(ii) The Employee shall be entitled to fifty percent (50%) of any
gains (with the Company being entitled to the other fifty percent (50%) of any
such gains), occurring with respect to the sale or transfer by the Employee of
any of the Shares prior to the third anniversary of the Effective Date.
(iii) The Employee shall be entitled to one hundred percent (100%) of
any gains occurring with respect to the sale or transfer by the Employee of any
of the Shares on or following the third anniversary of the Effective Date, but
on or prior to the fifth anniversary of the Effective Date.
(iv) The principal amount of the Note shall be reduced by fifty
percent (50%) of any losses occurring with respect to the sale or transfer by
the Employee of any of the Shares on or following the third anniversary of the
Effective Date, but on or prior to the fifth anniversary of the Effective Date.
(e) Grant of Stock Options. Promptly following purchase of the Shares by
the Employee, the Company shall grant to the Employee, under the Company's 1994
Incentive Stock Plan (the "Option Plan"), options (the "Options") to purchase an
aggregate of three (3) times the number of Shares. The Options shall be granted
subject to the terms and conditions of the Option Plan. The Options shall become
exercisable beginning on the seventh anniversary of the Effective Date at an
exercise price equal to the Purchase Price. In the event, however, that on the
fifth anniversary of the Effective Date, the Employee is then employed by the
Company and has repaid in full all outstanding indebtedness and accrued interest
under the Note and under that certain Promissory Note, of even date herewith,
from the Employee to Xx. Xxxxxx Xxxxxxx, Xx. and Xx. Xxxxxxxxxxx X. Xxxxxxxxx,
Xx., or has made such arrangements and executed such documentation, in form and
substance satisfactory to the Company, for the prompt repayment of such
indebtedness and accrued interest, then the exercise date of a number of Options
equal to three (3) times the number of Shares held by the Employee on such fifth
anniversary will be accelerated to such fifth anniversary.
3. Subject to Provisions of Plan. This Agreement and the rights and benefits
provided for herein are granted pursuant to the Plan and are governed by and
subject to all the terms and
conditions and provisions of the Plan, as it exists on the date of this
Agreement and as the Plan is amended from time to time. A copy of the Plan is
attached hereto as Exhibit A and made a part hereof as if fully set forth
herein. In the event of any conflict between the provisions of the Agreement and
the provisions of the Plan, the terms of the Plan shall control, except as
expressly stated otherwise herein. For purposes of this Agreement, the defined
terms in the Plan shall have the same meaning in this Agreement, except where
the context otherwise requires. By executing this Agreement, the Employee
affirms that he or she has carefully read this Agreement and the Plan and agrees
to be bound by the terms and conditions thereof.
4. Transferability. This Agreement and the rights and benefits hereunder are
not transferable or assignable.
5. Committee Authority. Any question concerning the interpretation of this
Agreement or the Plan, any adjustments required to be made under the Plan, and
any controversy which may arise under the Plan or this Agreement shall be
determined by the Compensation Committee (the "Committee") of the Company's
Board of Directors, or such Board of Directors, in its sole discretion. Such
decision by the Committee or Board of Directors, as applicable, shall be final
and binding.
6. Status of Participant. The Employee shall not be deemed a stockholder of
the Company with respect to any of the shares of Common Stock subject to the
Plan or this Agreement, except to the extent that such shares shall have been
purchased and transferred to him or her.
7. Securities Act of 1933. Unless at the time of purchase of shares of Common
Stock pursuant to this Agreement, there is an effective registration statement
filed with the Securities and Exchange Commission (the "SEC") under the 1933
Act, with respect to such sale of such shares of Common Stock, the Employee's
rights to purchase shares of Common Stock hereunder shall be subject to the
delivery to the Company of a letter, in form satisfactory to the Company's
counsel: (a) representing that the Employee intends to acquire such shares of
Common Stock for investment for his or her own account and without a view to the
resale or distribution thereof; and (b) agreeing that such shares of Common
Stock shall not be sold or transferred by him or her in the absence of an
effective registration statement filed with the SEC under the 1933 Act with
respect to such transfer or an opinion of counsel satisfactory to the Company
that such sale or transfer is not required to be registered under the 1933 Act
or any applicable state securities law.
8. Notice. Whenever any notice is required or permitted hereunder, such notice
must be in writing and personally delivered or sent by mail. Any notice
required or permitted to be delivered hereunder shall be deemed to be delivered
on the date which it is personally delivered, or, whether actually received or
not, on the third business day after it is deposited in the United States mail,
certified or registered, postage prepaid, addressed to the person who is to
receive it at the address which such person has theretofore specified by written
notice delivered in accordance herewith. The Company or the Employee may change,
by written notice to the other, the address previously specified for receiving
notices. Notices delivered to the Company shall be addressed as follows:
Orthodontic Centers of America, Inc., 0000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxxx 00000, Attention: Chief Financial Officer. Notices to the
Employee shall be hand delivered to the Participant on the premises of the
Company or its subsidiaries, or mailed to the last address shown on the records
of the Company.
9. Information Confidential. The Employee agrees that he or she will keep
confidential all information and knowledge that the Employee has relating to the
manner and amount of his or her participation in the Plan; provided, however,
that such information may be disclosed as required by law and may be given in
confidence to the Participant's spouse, tax and financial advisors, or to a
financial institution to the extent that such information is necessary to secure
a loan.
10. Governing Law. Except as is otherwise provided in the Plan, where
applicable, the provisions of this Agreement shall be governed by the internal
laws of the State of Florida, without regard to the principles of conflicts of
laws thereof.
11. Section 16. If the Employee is subject to the provisions of Section 16 of
the Securities Exchange Act of 1934, by virtue of his or her status as an
officer, director or ten percent (10%) or greater beneficial stockholder of the
Company, the Employee further affirms that he or she has not sold shares of
Common Stock during the six (6) month period immediately preceding the Effective
Date.
12. Miscellaneous. The Agreement contains the entire and only agreement
between the parties respecting the subject matter hereof, and any
representation, promise, or condition in connection therewith not incorporated
herein shall not be binding upon either party. The headings of the various
sections of this Agreement are for convenience of reference only, and shall not
modify, define, limit or expand the express provisions of this Agreement. This
Agreement shall be binding upon and inure to the benefit of any successor or
successors of the Company. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and
the Participant has set his or her hand hereto on the day and year first above
written.
ORTHODONTIC CENTERS OF AMERICA, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxxxxx, Xx.
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Name: Xxxxxxxxxxx X. Xxxxxxxxx, Xx.
Title: Secretary
EMPLOYEE:
/s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
