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EXHIBIT 10.57
RESTRICTED STOCK PURCHASE AGREEMENT
This RESTRICTED STOCK PURCHASE AGREEMENT (the "Agreement") is made as
of this ______ day of _______________, 1996, at Phoenix, Arizona, between HEALTH
ENHANCEMENT INTERNATIONAL, Inc., an Arizona corporation (the "Company") and
MCGRAW PARTNERS (the "Purchaser").
WHEREAS, Purchaser is willing and desires to invest in the initial
capitalization of the Company;
WHEREAS, Purchaser is a family partnership in which W. ▇▇▇ ▇▇▇▇▇▇
("▇▇▇▇▇▇") is a general partner, and McGraw is an officer and director of the
Company and his participation in the business of the Company is considered by
the Company to be important for its potential success ; and
WHEREAS, the Company is willing to sell to the Purchaser and the
Purchaser desires to purchase Common Stock of the Company according to the terms
and conditions hereof.
THEREFORE, the parties agree as follows:
1. Sale of Stock.
The Company hereby agrees to sell to the Purchaser and the Purchaser
hereby agrees to purchase from the Company an aggregate of Ten Thousand (10,000)
shares of the Company's Common Stock (the "Shares"), at the price of five cents
($0.05) per share, for an aggregate purchase price of Five Hundred Dollars
($500) (the "Purchase Price").
2. Payment of Purchase Price.
The Purchase Price for the Shares shall be paid at the time of
execution of this Agreement.
3. Issuance of Shares.
Upon receipt by the Company of the Purchase Price, the Company shall
issue a duly executed certificate evidencing the Shares in the name of the
Purchaser.
4. Repurchase Options. The Company shall have the option, but not the
obligation, to repurchase the Shares as follows:
a. Company Call Option. Commencing at any time January 1, 2000, the
Company shall have the right and option (the "Call Option") to repurchase all or
any portion of the Shares at a purchase price per share equal to the Fair Market
Value of the Shares, as determined pursuant to Section 7 of this Agreement as of
the exercise date of the Call Option. The Call Option shall be administered as
described in Section 4(d) below.
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b. Accelerated Call Option in Certain Circumstances. Notwithstanding
Section 4(a), if McGraw's service with the Company as an officer, director or
employee terminates prior to January 1, 2000, due to McGraw's resignation, death
or disability, or is terminated at any time by the Company for Cause, the
Company shall, upon the date of such termination, as reasonably fixed and
determined by the Company (the "Termination Date"), have the right and option
(the "Accelerated Call Option") to repurchase all or any portion of the Shares
at a purchase price per share equal to the Fair Market Value of the Shares as of
the Termination Date, as determined pursuant to Section 7 of this Agreement,
provided that if the termination of McGraw's employment is for Cause, the
purchase price for the Shares shall be the lower of the Purchase Price per share
paid by Purchaser for such Shares or the Fair Market Value per share of such
Shares as of the Termination Date. "Cause" means that McGraw shall have, in the
reasonable judgment of the Board of Directors of National Health Enhancement
Systems, Inc. ("NHES"), (i) committed a criminal act or an act of fraud,
embezzlement, breach of trust or other act of gross misconduct, (ii) willfully
violated written corporate policy or rules of the Company, or (iii) willfully or
habitually refused to follow the directions given by the Board of the Company or
of NHES from time to time after written notice of such refusals has been given
to McGraw by the Company or NHES. The Accelerated Call Option shall be
administered as described in Section 4(d) below.
▇. ▇▇▇▇▇▇ Put Option. Commencing at any time after January 1, 2002,
McGraw shall have the right and option (the "Put Option") to require the Company
to repurchase all of the Shares at a purchase price per share equal to the Fair
Market Value of the Shares as of the exercise date of such Put Option, as
determined pursuant to Section 7 of this Agreement. The Put Option shall be
administered as described in Section 4(d) below.
d. The options described above shall be administered as follows:
(i) The Company shall exercise the Call Option and Accelerated
Call Option described above (each a "Company Option"), if at all, by
delivering written notice of exercise to Purchaser specifying the
number of Shares being repurchased and the Consummation Date (as
hereafter defined). If the option is being exercised pursuant to
Section 4(b), the exercise notice must be delivered within ninety (90)
days following the Termination Date. Purchaser shall exercise the Put
Option described above, if at all, by delivering written notice of
exercise to the Company that Purchaser is electing to sell of its
Shares to the Company and specifying the Consummation Date.
(ii) Payment on the exercise of a Company Option or the Put
Option shall be made, against delivery of the certificates evidencing
the Shares with duly and properly executed assignments in blank, by an
initial payment on the Consummation Date equal to one-third of the
purchase price, and the balance shall be made in two equal annual
installments of principal and accrued interest, one on the first
anniversary of the Consummation Date and the other on the second
anniversary of the Commencement Date. Interest shall commence to
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accrue from the Consummation Date at the prime rate of interest in
effect on the Consummation Date as announced in the Wall Street Journal
(or a reasonable substitute selected by the Board of Directors of the
Company (the "Board")), and it shall be adjusted annually thereafter to
the then-existing Wall Street Journal-announced prime rate (or a
reasonable substitute selected by the Board), which adjusted rate of
interest shall remain in effect for the entire year then beginning
(interim changes in the prime rate during the year being disregarded).
If the Company's exercise of a Company Option is for less than one
third (1/3) of the Shares, then the Company shall pay the entire
purchase price on the Consummation Date. The "Consummation Date" for
purposes of this paragraph shall be the sixtieth (60th) day following
delivery of the Company's notice of exercise. The Company may, at its
election, prepay amounts due under this paragraph, without premium or
penalty.
(iii) If McGraw determines in connection with the exercise of
the Call Option or the Put Option that McGraw would not be able to
utilize installment sale reporting for tax purposes in connection with
the its sale of the Shares to the Company pursuant to the procedures
set forth in Section 4(ii), then the parties agree that the purchase
and sale transaction shall be restructured to divide the purchase and
sale transaction into three successive sales and purchase transactions
of the Shares, with three Consummation Dates, each to be on the dates
that payment would have been made under Section 4(ii). The number of
Shares sold in each transaction shall be one-third of the total amount
that would have been sold pursuant to the exercise, and the purchase
price shall be the same it would have been had the purchase and sale
been completed pursuant to Section 4(ii), provided that for the second
and third transactions, the price shall be increased by the amount of
interest that would have been paid pursuant to Section 4(ii) as it
relates to the Shares being purchased at the particular Consummation
Date. In addition, McGraw will deliver to NHES or its designee, at the
initial Consummation Date, McGraw's irrevocable and general proxy to
vote all of the Shares to be sold at the second and third Consummation
Dates.
5. Restriction on Transfer.
Except for a transfer of the Shares to the Company or its assignees as
contemplated by this Agreement or after compliance with Section 6 hereof, none
of the Shares or any beneficial interest therein shall be transferred,
encumbered or otherwise disposed of in any way.
6. Right of First Refusal.
a. In the event, at any time following the date of this Agreement,
the Purchaser or its transferee desires (or is required) to sell or transfer in
any manner the Shares, it shall first offer such Shares for sale to the Company
at the same price, and upon the same terms (or terms as similar as reasonably
possible) upon which it is proposing or is to dispose of such Shares. If the
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transfer does not involve a price freely set by the Purchaser, the price shall
be the Fair Market Value of the Shares. Such right of first refusal shall be
provided to the Company for a period of thirty (30) days following receipt by
the Company of written notice (the "Offering Notice") by the Purchaser of the
proposed transferee and the terms and conditions of said proposed sale or
transfer, or thirty (30) days following establishment of Fair Market Value
pursuant to Section 7. In the event the Company does not exercise its right of
first refusal and the Shares are not disposed of to such proposed transferee in
strict accordance with the Offering Notice within thirty (30) days following
lapse of the period of the right of first refusal provided to the Company, the
Shares shall once again be subject to the right of first refusal herein
provided.
b. In the event, at any time following the date of this Agreement, of
any transfer by operation of law or other involuntary transfer (including a
transfer pursuant to dissolution of marriage) of all or a portion of the Shares,
the Company shall have the right and option to purchase all of the Shares
transferred for a purchase price equal to the Fair Market Value of the Shares.
Upon such a transfer, the person acquiring the Shares shall promptly notify the
Secretary of the Company of such transfer. The right to purchase such Shares
shall be provided to the Company for a period of thirty (30) days following the
establishment of Fair Market Value pursuant to Section 7.
c. All transferees of Shares or any interest therein shall be required
as a condition of such transfer to agree in writing, in a form satisfactory to
the Company, that they will receive and hold such Shares or interests subject to
the provisions of this Agreement, including the Company's options under Section
4 and the right of first refusal in this Section 6. Any attempted sale or
transfer of the Shares shall be void unless the provisions of this Agreement are
met.
d. The options granted the Company pursuant to Section 4 and the right
of first refusal granted the Company by this Section 6 shall terminate at such
time as a public market exists for the Company's Common Stock (or any other
stock issued in exchange for the Shares purchased under this Agreement). Upon
termination of the right of first refusal and at the Purchaser's request the
Company shall issue a new certificate representing the Shares without a legend
referring to such refusal right. For the purpose of this Agreement, a "public
market" shall be deemed to exist if (i) such stock is listed on a national
securities exchange (as that term is used in the Securities Exchange Act of
1934) or (ii) such stock is traded on the over-the-counter market and prices are
published daily on business days in a recognized financial journal.
7. Definition of Fair Market Value.
The "Fair Market Value" of the Shares shall be the single value
negotiated by and agreeable to the Company and Purchaser. If the Fair Market
Value is not mutually agreed upon within fifteen (15) days after the expiration
date for the option under which any of the Shares, or interest therein, is to be
purchased, or within 30 days after the Company's notice of option exercise
pursuant to Section 4(a), the Fair Market Value shall be determined by
arbitration as set forth below. The arbitration will be held in Phoenix,
Arizona, and for this purpose each party
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hereby expressly consents to such arbitration in such place. In the event the
parties cannot mutually agree upon an arbitrator to settle their dispute or
controversy, each party shall then select one arbitrator, who shall be
experienced in valuing businesses similar to the Company and who shall be
independent from and have no prior relationships with either of the parties or
their affiliates. If the number of arbitrators is an even number, the
arbitrators so selected shall select an additional arbitrator. The arithmetic
average of the estimates of the two (2) arbitrators whose estimates are closest
in value shall be binding upon the parties hereto for all purposes, and judgment
to enforce any such binding decision may be entered in Superior Court, Maricopa
County, Arizona and ▇▇▇▇▇▇ County, Georgia (and for this purpose each party
hereby expressly and irrevocably consents to the jurisdiction of said courts).
If any party fails to select an arbitrator within fifteen (15) days after
written demand from another other party to do so, or if the arbitrators selected
fail to select an additional arbitrator within fifteen (15) days after the last
of such selected arbitrators is appointed, then such other arbitrator or
arbitrators shall be selected pursuant to the then existing rules and
regulations of the American Arbitration Association governing commercial
transactions. In all other respects, the arbitrators shall conduct all
proceedings pursuant to the Uniform Arbitration Act as adopted in the State of
Arizona and the then existing rules and regulations of the American Arbitration
Association governing commercial transactions to the extent such rules and
regulations are not inconsistent with such Act or this Agreement.
8. Investment Representations.
In connection with the purchase of the Shares, the Purchaser represents
and warrants to the Company the following:
a. The Purchaser is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the securities.
b. The Purchaser is purchasing these securities for investment for its
own account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933 and
applicable state securities laws (collectively, the "Securities Act"). The
Purchaser further acknowledges and understands that the securities have not been
registered under the Securities Act by reason of a specific exemption therefrom,
which exemption depends upon, among other things, the bona fide nature of its
investment intent as expressed herein.
c. The Purchaser acknowledges and understands that the securities must
be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. The
Purchaser further acknowledges and understands that the Company is under no
obligation to register the securities. The Purchaser understands that the
certificate evidencing the securities will be imprinted with a legend which
prohibits the transfer of the securities unless they are registered or such
registration is not required in the opinion of
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counsel for the Company.
d. The Purchaser is aware of the adoption of Rule 144 by the
Securities and Exchange Commission, promulgated under the Securities Act, which
permits limited public resale of Securities acquired in a non-public offering
subject to the satisfaction of certain conditions and that such conditions are
not currently satisfied with respect to the Company and the Shares and there can
be no assurance (and the Company undertakes no obligation to ensure) that such
conditions will ever be met.
e. The Purchaser further acknowledges that in the event all of the
requirements of Rule 144 are not met, compliance with another registration
exemption will be required; and that although Rule 144 is not exclusive, the
staff of the Commission has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and other than
pursuant to Rule 144 will have a substantial burden of proof in establishing
that an exemption from registration is available for such offers or sales and
that such persons and the brokers who participate in the transactions do so at
their own risk.
9. Legends.
The share certificate(s) evidencing the Shares issued hereunder shall
be endorsed with the following legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY
NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY."
10. Adjustment for Stock Split.
All references to the number and purchase price of the Shares in this
Agreement shall be appropriately adjusted to reflect any stock split, stock
dividend or other change in the Shares which may be made by the Company after
the date of this Agreement. This provision does not grant Purchaser any
preemptive or other rights to acquire additional shares of the Company.
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11. General Provisions.
a. This Agreement shall be governed by the laws of the State of
Arizona. This Agreement represents the entire agreement between the parties with
respect to the purchase of Common Stock by the Purchaser and may only be
modified or amended in writing signed by both parties.
b. Any notice, demand or request required or permitted to be given by
either the Company or the Purchaser pursuant to the terms of this Agreement
shall be in writing and shall be deemed given when delivered personally or
deposited in the U.S. mail, first class with postage prepaid, and addressed to
the parties at the addresses set forth at the end of this Agreement or such
other address as a party may request by notifying the other in writing.
c. The rights and benefits of the Company under this Agreement shall
be transferable to any one or more persons or entities, and all covenants and
agreements hereunder shall inure to the benefit of, and be enforceable by the
Company's successors and assigns. The rights and obligations of the Purchaser
under this Agreement may only be assigned with the prior written consent of the
Company.
d. Either party's failure to enforce any provision or provisions of
this Agreement shall not in any way be construed as a waiver of any such
provision or provisions, nor prevent that party thereafter from enforcing each
and every other provision of this Agreement. The rights granted both parties
herein are cumulative and shall not constitute a waiver of either party's right
to assert all other legal remedies available to it under the circumstances.
e. The Purchaser agrees to execute, upon request of the Company, any
further documents or instruments necessary or desirable to carry out the
purposes or intent of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date set forth above.
HEALTH ENHANCEMENT MCGRAW PARTNERS
INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ W. ▇▇▇ ▇▇▇▇▇▇
--------------------------- ------------------------
W. ▇▇▇ ▇▇▇▇▇▇
Title: President Its: Authorized General Partner
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▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ________________________________
17th Floor ________________________________
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ________________________________