Exhibit 10.12
STOCK RESTRICTIONS AND PLEDGE AGREEMENT
This Stock Restrictions and Pledge Agreement (this "AGREEMENT") is made
as of this ___ day of _______, 199_, by and among [insert name of Optometric
professional corporation] a corporation duly organized and existing under the
laws of (the "PC"), [insert name of stockholder] (the "STOCKHOLDER") and [insert
name of management company] a Delaware corporation ("MC").
WHEREAS, the Stockholder is the holder of all of the issued and
outstanding capital stock of the PC;
WHEREAS, MC has entered into a Management Agreement dated as of
________, 199__ (as amended, the "MANAGEMENT AGREEMENT") with the PC, pursuant
to which the PC has appointed MC to be its sole and exclusive business manager
and administrator of all business and administrative functions and services
associated with the PC's provision of Optometric Services (as defined therein);
WHEREAS, the Stockholder may transfer his stock in the PC only to those
eligible to hold such stock pursuant to the provisions of applicable law, the
PC's Articles of Organization and the PC's By-Laws;
WHEREAS, the PC desires to provide for the orderly continuation of its
business and affairs in the event of the death of the Stockholder, his
disqualification to practice optometry in the State of ________, the cessation
of his employment by MC, the occurrence of certain other circumstances including
any other event or condition which might result in or, under applicable law,
require the transfer of his stock; and
WHEREAS, the Stockholder desires to determine prospectively the
conditions and terms under which his shares in the PC shall be sold or otherwise
transferred.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. PURCHASE AND SALE. As hereinafter set forth, an Eligible Person (as
hereinafter defined) shall purchase and the Stockholder (or, if applicable, his
estate or personal representative or, in the case of an impermissible
transferee, such purported transferee) shall sell and transfer to the Eligible
Person, all of the Stockholder's shares of stock in the PC upon the occurrence
of any one or more of the following events or conditions (each, an "EVENT"):
A. the death or disability of the Stockholder;
B. the Stockholder's disqualification to practice
optometry in the Commonwealth of Massachusetts or any other event or
circumstance the effect of which is to cause the Stockholder to cease
being an Eligible Person;
C. the transfer, by operation of law or otherwise, of
the Stockholder's shares of stock in the PC to a person who is not an
Eligible Person;
D. the termination of the Stockholder's employment by
the PC or by MC;
E. the occurrence of any other event or the existence of
any other condition which, in the reasonable opinion of MC (in its
capacity as exclusive business manager and administrator of the PC),
impairs or renders less-than-optimal MC's business management and
administration of all of the business and administrative functions and
services of the PC; or
F. the occurrence of any other event or the existence of
any other condition which might require or otherwise result in the sale
or transfer by the Stockholder (or his estate or personal
representative) of the Stockholder's shares of stock in the PC.
The Stockholder or his personal representative shall notify MC
within ten (10) days of the occurrence of any Event. If any Event occurs, the
Stockholder's shares of stock in the PC shall be offered to an Eligible Person
designated by MC, which Eligible Person shall purchase the shares from the
Stockholder (or his estate, personal representative or purported transferee, as
the case may be). In the event that MC shall fail to designate an Eligible
Person to purchase the shares within sixty (60) days of the later of the
occurrence of an Event and MC's notification thereof, the PC shall repurchase
the shares. The price to be paid to and to be accepted by the Stockholder (or
his estate, personal representative or purported transferee, as the case may be)
as payment in full for the Stockholder's shares of stock in the PC shall be the
fair market value of such shares, as computed in accordance with Section 2 of
this Agreement. For purposes of this Agreement, "Eligible Person" shall mean an
individual who (i) is duly licensed to practice optometry or ophthalmology in
the Commonwealth of Massachusetts or such other state or territory of the United
States or the District of Columbia as may be permitted under applicable laws,
rules and regulations as in effect from time to time and, (ii) in the case of
any holder of shares of the PC other than the Stockholder, shall have been
approved by MC.
2. PURCHASE PRICE. Unless and until changed as provided hereinafter, it
is agreed that, for the purpose of determining the purchase price to be paid for
the interest of the Stockholder, the "fair market value" of each share of stock
shall mean the book value per share outstanding as appearing upon the books of
the PC according to the balance sheet of the PC as of the last day of the month
preceding the date of the Event giving rise to the sale, as adjusted as
hereinafter set forth. Shares of stock held in the treasury of the PC shall not
be considered as shares outstanding. Such balance sheet shall be prepared and
certified by the independent accountant serving as auditor of the PC. Such
accountant shall compute the book value per share from such balance sheet and
such computation shall be final and binding upon the parties
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as to such book value. Such balance sheet shall be prepared in accordance with
generally accepted accounting principles, subject, however, to the following:
A. Property subject to depreciation or amortization
shall be valued at depreciated or amortized book value as of the date
of the balance sheet. The depreciation and amortization rates and
methods in current use by the PC shall be followed in determining the
amount of such depreciation or amortization.
B. Real estate taxes and taxes based on tangible
personal property shall be prorated for the current year. If the amount
of such taxes is not known, they shall be computed on the basis of the
last known tax rate and assessment, so far as available.
C. All taxes other than those included in subparagraph
B. above shall be computed as though the PC's current tax year had
ended on the date of the balance sheet.
D. No allowance shall be made for the value of goodwill,
trademarks, copyrights, licenses, agencies, patents, contracts,
employment agreements, or the value of any lease-hold interests.
E. Investments in securities having an established
market value shall be valued at the market price as of the date of the
balance sheet or if such date is not a business day, as of the last
preceding business day.
F. Investments in securities having no established
market value and not representing 100% ownership shall be valued at the
book value thereof determined for the latest audited balance sheet of
the corporation issuing such securities.
G. In any determination of value made after the death of
the Stockholder, the value of any insurance proceeds paid or payable to
the PC shall not be taken into account.
3. METHOD OF PAYMENT.
A. An amount equal to the purchase price per share (as
determined in accordance with Section 2) multiplied by the number of
shares of capital stock of the PC to be purchased hereunder (the
"PURCHASE PRICE") shall be paid to the Stockholder (or the
Stockholder's estate or purported transferee, as the case may be)
within sixty (60) days following the later of the date upon which the
Event requiring purchase of the shares shall have occurred and MC's
notification thereof. The purchaser shall pay such Purchase Price
wholly in cash, wholly by delivery of its promissory note, or partly in
cash and partly by
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delivery of its promissory note, as the purchaser shall elect. In the
event that the purchaser shall elect to pay the Purchase Price in whole
or in part by delivery of its promissory note, such note shall bear
interest at a rate equal to the prime interest rate then prevailing at
Bank of Boston, computed as of the date of the Event requiring
purchase, and shall be fully amortized in equal monthly payments
including interest over a three (3) year period, with the right of the
purchaser to prepay at any time without premium or penalty.
B. Upon the payment to the Stockholder (or to the
Stockholder's estate, personal representative or purported transferee,
as the case may be) of the Purchase Price for the Stockholder's shares
of capital stock of the PC, the Stockholder (or the Stockholder's
personal representative or purported transferee) shall promptly cause
the delivery to the purchaser of the certificate or certificates
representing such shares duly endorsed for transfer to the purchaser or
accompanied by one or more separate stock powers duly executed by the
Stockholder (or the Stockholder's personal representative or purported
transferee) and shall take all such further action as may then be
necessary in order to effect the valid transfer of such shares,
provided that such shares shall continue to be subject to the
provisions of this Agreement. For the purpose of this Section 3.B,
payment shall mean payment of cash or delivery of the purchaser's
promissory note or both, as the case may be.
4. RESTRICTIONS ON TRANSFERS; COMPLIANCE WITH AGREEMENT.
A. The Stockholder agrees not to transfer, assign,
hypothecate or in any way alienate any of his shares of stock of the PC
or any right or interest therein, except as provided in this Agreement.
B. Each certificate representing shares of capital stock
of the PC held by the Stockholder shall bear a legend indicating that
such shares are subject to the restrictions upon transfer and other
covenants contained in this Agreement.
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C. In the event that the Stockholder (or, if deceased,
the personal representative of the Stockholder) shall neglect or refuse
to comply with the provisions of this Agreement, the shares of stock
held by such person shall, so long as such neglect or refusal shall
continue, have no voting power and shall not be entitled to any
dividends.
D. Any transfer or other disposition of shares of
capital stock of the PC by the Stockholder (or his estate or personal
representative) other than in accordance with this Agreement shall be
null and void and shall not be recognized upon the books of the PC. If
the transfer to the Eligible Person designated by MC or the repurchase
by the PC of any shares of the PC is not completed within the
prescribed time period, the PC may cancel such shares and the holder
thereof shall have no further interest or rights of a shareholder of
the PC other than the right to receive the Purchase Price therefor, as
computed in accordance with Sections 2 and 3 of this Agreement. In the
event that the
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Stockholder (or, if deceased, the personal representative of the
Stockholder) shall fail to deliver the stock certificate(s) and stock
power(s) as provided in Section 3.B within five (5) days after payment
of the Purchase Price for the shares represented by such
certificate(s), the PC may cancel such shares or take such other steps
as the PC reasonably deems necessary to effect on the books of the PC
the transfer of the shares to the Eligible Person designated by MC or
the redemption by the PC of such shares, as the case may be.
E. The provisions of this Agreement shall not be deemed
to have been waived or discharged by any transfer of shares of capital
stock of the PC made in compliance herewith and any such shares held by
any holder subsequent to such transfer shall be subject in every
respect to the provisions of this Agreement. Any transfer of stock is
subject to the security interest created by Section 5 of this
Agreement.
5. GRANT OF SECURITY INTEREST. To induce MC to enter into the
Management Agreement, and as security for the prompt payment, performance and
observance by the PC of all of its obligations, debts and covenants now existing
or hereafter arising thereunder (the "SECURED OBLIGATIONS"), the Stockholder
hereby pledges and hypothecates to MC, and grants to MC a security interest in,
the following property (the "PLEDGED SECURITIES"):
A. all shares of stock and other forms of ownership
interest and the certificates or other instruments or documents
evidencing the Stockholder's ownership in the PC (the "INITIAL PLEDGED
SECURITIES");
B. any additional shares of stock and other forms of
ownership interest of the PC which may at any time hereafter be
acquired by the Stockholder and the certificates or other instruments
or documents evidencing same; and
C. all dividends, distributions and monies paid or
distributed in respect of or in exchange for, and all proceeds of, any
or all of the foregoing.
6. DELIVERY OF CERTIFICATES AND INSTRUMENTS. The Stockholder shall
deliver to MC:
A. the original certificates or other instruments or
documents evidencing the Initial Pledged Securities concurrently with
the execution and delivery of this Agreement; and
B. the original certificates or other instruments or
documents evidencing all other Pledged Securities promptly and, in any
event, within three days after the Stockholder's receipt thereof.
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All Pledged Securities which are certificated securities shall be in
registered form.
7. OPTION TO PURCHASE. The Stockholder hereby grants to MC the option
to designate an Eligible Person to purchase up to 100% of the Stockholder's
shares in the PC at a purchase price computed in accordance with Section 2 and
payable in accordance with Section 3 of this Agreement.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Stockholder
represents, warrants and covenants that:
A. the Initial Pledged Securities are, and all other
Pledged Securities hereafter delivered to MC will be, owned by the
Stockholder free and clear of all claims, mortgages, pledges, liens,
encumbrances and security interests of every nature whatsoever, except
as created by this Agreement;
B. the Stockholder shall not sell, transfer, assign,
pledge or grant a security interest in the Pledged Securities to any
person other than as permitted by this Agreement;
C. the Pledged Securities consisting of shares of stock
constitute, and during the term of the Management Agreement will
continue to constitute, 100% of the outstanding shares of capital stock
of the PC; and
D. no consent of any other person and no consent,
license, permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any
governmental instrumentality is required in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement.
9. VOTING RIGHTS AND CERTAIN PAYMENTS PRIOR TO DEFAULT. So long as
there shall exist no condition, event or act which constitutes, or with notice
or lapse of time or both would constitute, a default by the PC or the
Stockholder hereunder or a default by the PC under the Management Agreement, the
Stockholder shall be entitled:
A. to exercise, as the Stockholder shall think fit, but
in a manner not inconsistent with the terms hereof or of the Management
Agreement, the voting power with respect to the Pledged Securities; and
B. to receive and retain for his own account any and all
dividends (other than stock or liquidating dividends) and interest at
any time and from time to time declared or paid upon any of the Pledged
Securities.
As used in this Agreement, a "default" shall be deemed to have occurred
in the event that (i) the Stockholder shall fail to perform on a timely basis
any of his obligations or shall
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breach any of his covenants hereunder in any material respect, (ii) the PC shall
fail to perform on a timely basis any of its obligations hereunder or under the
Management Agreement or breach any of its covenants hereunder or under the
Management Agreement in any material respect or (iii) any representation or
warranty made by the Stockholder or the PC hereunder or, in the case of the PC,
under the Management Agreement, shall be discovered by MC to have been false or
misleading in any material respect when made.
10. VOTING RIGHTS AND CERTAIN PAYMENTS AFTER DEFAULT. So long as there
shall exist a condition, event or act which constitutes, or with notice or lapse
of time or both would constitute, a default by the PC or Stockholder hereunder
or a default by the PC under the Management Agreement, MC shall be entitled to
exercise all voting power with respect to the Pledged Securities and to receive
and retain, as additional collateral hereunder or, at MC's option, for
application to the Secured Obligations, any and all dividends and interest at
any time and from time to time declared or paid upon any of the Pledged
Securities.
11. EXTRAORDINARY PAYMENTS AND DISTRIBUTIONS. In the event that, upon
the dissolution or liquidation (in whole or in part) of the PC, any sum is paid
as a liquidating dividend or otherwise upon or with respect to any of the
Pledged Securities, then such sum shall be paid over to MC promptly, and in any
event within three (3) days after receipt thereof, to be held by MC as
additional collateral to secure full payment of the Secured Obligations in
accordance with the terms of the Management Agreement. In case any stock
dividend shall be declared on any of the Pledged Securities, or any shares of
stock or fractions thereof shall be issued pursuant to any stock split involving
any of the Pledged Securities, or any distribution of capital shall be made on
any of the Pledged Securities, or any shares, obligations or other property
shall be distributed upon or with respect to the Pledged Securities pursuant to
a recapitalization or reclassification of the capital of the issuer thereof, or
pursuant to the dissolution, liquidation (in whole or in part), bankruptcy or
reorganization of the PC, or to the merger or consolidation of the PC, with or
into another corporation, the shares, obligations or other property so
distributed shall be delivered to MC promptly, and in any event within three
days after receipt thereof, to be held by MC as additional collateral hereunder,
and all of the same (other than cash which shall be held as cash collateral or
applied as set forth in Section 12 hereof) shall constitute Pledged Securities
for all purposes hereof.
12. APPLICATION OF CASH COLLATERAL. Any cash received and retained by
MC as additional collateral hereunder pursuant to the foregoing provisions may
at any time and from time to time be applied (in whole or in part) by MC, at its
option, to the payment of the Secured Obligations.
13. REMEDIES UPON DEFAULT.
A. If a default by the PC or the Stockholder shall occur
hereunder or a default by the PC shall occur under the Management
Agreement, MC, without
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obligation to resort to other security, shall have the right at any
time and from time to time to sell, resell, assign and deliver, in its
discretion, all or any of the Pledged Securities, in one or more
parcels at the same or different times, and all right, title and
interest, claim and demand therein and right of redemption thereof, on
any securities exchange on which the Pledged Securities or any of them
may be listed, or at public or private sale, for cash, upon credit or
for future delivery, and in connection therewith MC may bid at any such
sale for its own account and MC may grant options, the Stockholder
hereby waiving and releasing any and all equity or right of redemption.
If any of the Pledged Securities are sold by MC upon credit or for
future delivery, MC shall not be liable for the failure of the
purchaser to purchase or pay for the same and, in the event of any such
failure, MC may resell such Pledged Securities. In no event shall the
Stockholder be credited with any part of the proceeds of sale of any
Pledged Securities until cash payment thereof has actually been
received by MC.
B. No demand, advertisement or notice, all of which are
hereby expressly waived, shall be required in connection with any sale
or other disposition of any part of the Pledged Securities which
threatens to decline speedily in value; or otherwise MC shall give the
Stockholder at least ten (10) days' prior notice sent by ordinary mail
of the time and place of any sale and of the time after which any
private sale or other disposition is to be made, which notice the
Stockholder agrees is reasonable, all other demands, advertisements and
notices being hereby waived. MC shall not be obligated to make any sale
of Pledged Securities if it shall determine not to do so, regardless of
the fact that notice of sale may have been given. MC may, without
notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be
made at the time and place to which the same was so adjourned.
C. The remedies provided herein in favor of MC shall not
be deemed exclusive, but shall be cumulative.
14. CARE OF PLEDGED SECURITIES. MC shall have no duty as to the
collection or protection of the Pledged Securities or any income thereon or as
to the preservation of any rights pertaining thereto, beyond the safe custody of
any thereof actually in its possession.
15. POWER OF ATTORNEY. The Stockholder hereby appoints MC as its
attorney-in-fact for the purpose of carrying out the provisions of this
Agreement and taking any action and executing any instrument which MC may deem
necessary or advisable to accomplish the purposes hereof. Without limiting the
generality of the foregoing, MC shall have the right and power to (a) receive,
endorse and collect all checks and other orders for the payment of money made
payable to the Stockholder representing any interest or dividend or other
distribution payable in respect of the Pledged Securities or any part thereof
and to give full discharge for the same, and (b) to execute endorsements,
assignments or other instruments of conveyance or
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transfer with respect to all or any of the Pledged Securities. The power of
attorney granted hereunder is coupled with an interest and is irrevocable.
16. TERMINATION OF AGREEMENT. This Agreement shall terminate on the
earlier of:
A. Upon the written agreement of the parties hereto; and
B. Upon the termination of the Management Agreement and
satisfaction in full of all of the PC's obligations thereunder.
17. MISCELLANEOUS.
A. FURTHER ASSURANCES. The Stockholder shall, upon request of
MC, duly execute and deliver, or cause to be duly executed and
delivered, to MC such further instruments and take and cause to be
taken such further actions as may be necessary or proper in the
reasonable opinion of MC to carry out more effectively the provisions
and purposes of this Agreement. The other parties hereto agree to
perform such further acts and to execute and deliver such further
documents as may be reasonably necessary to carry out the provisions of
this Agreement.
B. NOTICES. Unless otherwise provided herein, all notices,
requests and other communications to any party hereunder shall be in
writing and shall be personally delivered or sent by registered or
certified mail, postage prepaid, return receipt requested, or by a
reputable courier delivery service or by telecopy and shall be given to
the respective party to whom such notice relates at such party's last
known address as recorded in the records of the PC, or such other
address or telecopy number as such party may hereafter specify. Each
such notice, request or other communication shall be effective (i) if
given by telecopy, when such telecopy is transmitted to the telecopy
number specified in this Section and the appropriate confirmation is
received, (ii) if given by registered or certified mail, 72 hours after
such communication is deposited with the post office, addressed as
aforesaid, or (iii) if given by any other means (including, without
limitation, by air courier), when delivered at the address specified in
accordance with this Section.
C. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Massachusetts, without giving effect to the conflict of law principles
thereof.
D. NO WAIVER. No act, omission or delay by MC or course of
dealing between MC and the Stockholder shall constitute a waiver of the
rights and remedies of MC hereunder. No single or partial waiver by MC
of any default hereunder, under the Management Agreement or right or
remedy which it may have shall operate as a waiver of any other
default, right or remedy or of the same default, right or remedy on
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a future occasion. The Stockholder hereby waives presentment, notice of
dishonor and protest of all instruments included in or evidencing the
Secured Obligations or Pledged Securities, and all other notices and
demands whatsoever (except as expressly provided herein).
E. AMENDMENTS AND WAIVERS. No provision hereof shall be
modified, altered or limited except by a written instrument expressly
referring to this Agreement and to such provision, and executed by the
parties hereto.
F. BENEFIT OF AGREEMENT; CONTINUING SECURITY INTEREST. This
Agreement shall be binding upon the parties hereto, their respective
heirs, executors, administrators, successors and assigns, and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and assigns. This Agreement shall
create a continuing security interest in the Pledged Securities which
shall remain in full force and effect until termination of the
Management Agreement and satisfaction in full of all of the PC's
obligations thereunder.
G. SEVERABILITY. In the event that any court of competent
jurisdiction shall determine that any provision, or any portion
thereof, contained in this Agreement shall be unreasonable or
unenforceable in any respect, then such provision shall be deemed
limited to the extent that such court deems it reasonable and
enforceable, and as so limited shall remain in full force and effect.
In the event that such court shall deem any such provision, or portion
thereof, wholly unenforceable, the remaining provisions of this
Agreement shall nevertheless remain in full force and effect. If the
provisions of this Agreement governing the transferability of the
Stockholder's shares of capital stock in the PC shall be deemed
unenforceable, then the provisions of Article IV of the PC's By-Laws
shall instead govern the transferability of such shares.
H. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original and all of which shall together constitute one and the same
agreement.
I. ACKNOWLEDGMENT OF RECEIPT. The Stockholder acknowledges
receipt of a copy of the Management Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties to this Agreement have caused the same
to be duly executed as of the date first written above.
[____________________]
BY:
---------------------------------
Name:
Title: President
[____________________]
BY:
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
---------------------------------
[Insert name of shareholder]
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