|
Delaware
(State or other jurisdiction of
incorporation or organization) |
| |
8062
(Primary standard industrial
classification code number) |
| |
87-1471855
(I.R.S. employer
identification number) |
|
|
Copies to:
|
| |||
|
Thomas P. Conaghan, Esq.
Richard S. Bass, Esq. Daniel L. Woodard, Esq. McDermott Will & Emery LLP 500 North Capitol Street NW Washington, DC 20001-1531 Telephone: (202) 756-8161 |
| |
Erika L. Weinberg, Esq.
Peter M. Labonski, Esq. Keith L. Halverstam, Esq. Latham & Watkins LLP 1271 Avenue of the Americas New York, NY 10020 Telephone: (212) 906-1297 |
|
| Large accelerated filer ☐ | | | Accelerated filer ☐ | |
| Non-accelerated filer ☒ | | |
Smaller reporting company ☒
Emerging growth company ☒ |
|
| | ||||||||||||||||||||||||||||
Title of Each Class of Securities
to be Registered |
| | |
Amount to be
Registered(1) |
| | |
Proposed Maximum
Offering Price per Share (2) |
| | |
Proposed Maximum
Aggregate Offering Price (2)(3) |
| | |
Amount of
Registration Fee (4) |
| ||||||||||||
Common Stock, $0.001 par value per share
|
| | | | | 11,500,000 | | | | | | $ | 17.00 | | | | | | $ | 195,500,000 | | | | | | $ | 18,122.85 | | |
| | |
Per share
|
| |
Total
|
| ||||||
Initial public offering price
|
| | | $ | | | | | $ | | | ||
Underwriting discounts and commissions(1)
|
| | | $ | | | | | $ | | | ||
Proceeds, before expenses, to us
|
| | | $ | | | | | $ | | | ||
Proceeds, before expenses, to the selling stockholders
|
| | | $ | | | | | $ | | | |
| Morgan Stanley | | |
Piper Sandler
|
| |
SVB Leerink
|
|
| First Liberties Financial | | |
Raymond James
|
|
| | | | | 1 | | | |
| | | | | 15 | | | |
| | | | | 50 | | | |
| | | | | 51 | | | |
| | | | | 52 | | | |
| | | | | 53 | | | |
| | | | | 54 | | | |
| | | | | 55 | | | |
| | | | | 56 | | | |
| | | | | 76 | | | |
| | | | | 77 | | | |
| | | | | 92 | | |
| | |
Three Months Ended
September 30, |
| |||||||||
| | |
2021
(Estimate) |
| |
2020
(Actual) |
| ||||||
Consolidated Statements of Operations Data: | | | | | | | | | | | | | |
($ in thousands) | | | | | | | | | | | | | |
Revenue
|
| | | $ | 34,651 | | | | | $ | 17,837 | | |
Operating expenses: | | | | | | | | | | | | | |
Cost of service
|
| | | | 11,410 | | | | | | 6,758 | | |
Selling, general and administrative
|
| | | | 11,830 | | | | | | 6,199 | | |
Depreciation and amortization
|
| | | | 1,641 | | | | | | 1,432 | | |
Total operating expenses
|
| | | | 24,881 | | | | | | 14,389 | | |
Income from operations
|
| | | | 9,770 | | | | | | 3,448 | | |
Interest expense, net
|
| | | | 1,566 | | | | | | 529 | | |
Net income
|
| | | | 8,204 | | | | | | 2,919 | | |
Pro forma income tax expense
|
| | | | 1,969 | | | | | | 496 | | |
Pro forma net income
|
| | | $ | 6,235 | | | | | $ | 2,423 | | |
Net income (loss) per unit data (unaudited): | | | | | | | | | | | | | |
Net income (loss) per unit | | | | | | | | | | | | | |
Basic and diluted
|
| | | | 82 | | | | | | 29 | | |
Pro forma net income (loss) per unit | | | | | | | | | | | | | |
Basic and diluted
|
| | | | 62 | | | | | | 24 | | |
Weighted average units outstanding | | | | | | | | | | | | | |
Basic and diluted
|
| | | | 100 | | | | | | 100 | | |
Other Data: | | | | | | | | | | | | | |
Adjusted EBITDA(1)
|
| | | $ | 12,266 | | | | | $ | 5,333 | | |
Adjusted EBITDA Margin(2)
|
| | | | 35.4% | | | | | | 29.9% | | |
Cases
|
| | | | 2,743 | | | | | | 1,710 | | |
Revenue per case
|
| | | $ | 12,633 | | | | | $ | 10,431 | | |
| | |
Three Months Ended
September 30, |
| |||||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| ||||||
Net Income
|
| | | $ | 8,204 | | | | | $ | 2,919 | | |
Plus | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 1,641 | | | | | | 1,432 | | |
Interest expense, net
|
| | | | 1,566 | | | | | | 529 | | |
Pre-opening de novo and relocation costs
|
| | | | 307 | | | | | | 247 | | |
Restructuring and related severance costs
|
| | | | 45 | | | | | | — | | |
Sponsor management fee
|
| | | | 417 | | | | | | 125 | | |
Unit-based compensation
|
| | | | 86 | | | | | | 81 | | |
Adjusted EBITDA
|
| | | $ | 12,266 | | | | | $ | 5,333 | | |
Adjusted EBITDA Margin
|
| | | | 35.4% | | | | | | 29.9% | | |
|
Common stock offered by us
|
| | 1,562,500 shares. | |
|
Common stock offered by the selling stockholders
|
| | 8,437,500 shares. | |
|
Option to purchase additional shares
|
| |
Certain of the selling stockholders have granted to the underwriters the option, exercisable for 30 days from the date of this prospectus, to purchase up to 1,500,000 additional shares of common stock at the initial public offering price, less estimated underwriting discounts and commissions.
|
|
|
Common stock to be outstanding immediately after completion of this offering
|
| | 55,359,177 shares. | |
|
Use of proceeds
|
| |
We expect to receive net proceeds to us, after deducting estimated offering expenses and underwriting discounts and commissions, will be approximately $10.7 million (or $9.0 million if the underwriters exercise in full their option to purchase additional shares of common stock), based on an assumed offering price of $16.00 per share (the mid-point of the price range set forth on the cover of this prospectus).
|
|
| | | |
We intend to use a portion of the net proceeds from this offering to fund our de novo growth strategy. We intend to use the balance of the net proceeds for general corporate purposes and working capital. See the section entitled “Use of Proceeds” in this prospectus.
|
|
| | | |
We will not receive any of the proceeds from the sale of our common stock offered by the selling stockholders.
|
|
|
Directed Share Program
|
| |
At our request, the underwriters have reserved up to 500,000 shares of our common stock, or up to 5% of the shares offered by this prospectus, for sale at the initial public offering price to certain individuals associated with us and our Sponsor (as defined hereinafter), including our directors, officers, employees, and certain other individuals identified by management. The sales will be made at our direction by Morgan Stanley & Co. LLC and its affiliates through a directed share program. The number of shares of our common stock available for sale to the general public in this offering will be reduced to the extent that such persons purchase such reserved shares. Any reserved shares not so purchased will be offered by Morgan Stanley & Co. LLC to the general public on the same terms as the other shares of our common stock offered by this prospectus. If purchased by our directors and officers, the shares will be subject to a 180-day lock-up restriction. See the section titled “Underwriting” for additional information.
|
|
|
Dividend policy
|
| |
We have no current plans to pay dividends on our common stock. See the section entitled “Dividend Policy” in this prospectus.
|
|
|
Trading Symbol
|
| |
We have applied to list our common stock on NASDAQ under the symbol “AIRS.”
|
|
|
Risk factors
|
| |
You should read carefully the “Risk Factors” section of this prospectus for a discussion of factors that you should consider before deciding to invest in shares of our common stock.
|
|
| | |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||
| | |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||
Consolidated Statements of Operations Data: | | | | | | ||||||||||||||||||||
($ in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue
|
| | | $ | 61,108 | | | | | $ | 22,086 | | | | | $ | 62,766 | | | | | $ | 41,236 | | |
Operating expenses: | | | | | | | | | | | | | | | | ||||||||||
Cost of service
|
| | | | 20,008 | | | | | | 8,983 | | | | | | 23,471 | | | | | | 15,488 | | |
Selling, general and administrative
|
| | | | 18,990 | | | | | | 10,031 | | | | | | 23,621 | | | | | | 20,125 | | |
Loss on debt modification
|
| | | | 682 | | | | | | — | | | | | | — | | | | | | — | | |
Depreciation and amortization
|
| | | | 3,023 | | | | | | 2,733 | | | | | | 5,641 | | | | | | 4,960 | | |
Total operating expenses
|
| | | | 42,703 | | | | | | 21,747 | | | | | | 52,733 | | | | | | 40,573 | | |
Income from operations
|
| | | | 18,405 | | | | | | 339 | | | | | | 10,033 | | | | | | 663 | | |
Interest expense, net
|
| | | | 1,757 | | | | | | 1,247 | | | | | | 2,456 | | | | | | 2,875 | | |
Net income (loss)
|
| | | | 16,648 | | | | | | (908) | | | | | | 7,577 | | | | | | (2,212) | | |
Pro forma income tax expense (unaudited)
|
| | | | 3,975 | | | | | | — | | | | | | 1,827 | | | | | | — | | |
Pro forma net income (loss) (unaudited)
|
| | | $ | 12,673 | | | | | $ | (908) | | | | | $ | 5,750 | | | | | $ | (2,212) | | |
Consolidated Statements of Cash Flow Data: | | | | | | ||||||||||||||||||||
Net cash provided by operating activities
|
| | | $ | 23,814 | | | | | $ | 1,683 | | | | | $ | 13,957 | | | | | $ | 4,938 | | |
Net cash used in investing activities
|
| | | | (3,149) | | | | | | (1,720) | | | | | | (3,689) | | | | | | (4,439) | | |
Net cash used in financing activities
|
| | | | (14,196) | | | | | | (2,034) | | | | | | (5,017) | | | | | | (783) | | |
Net income (loss) per unit data (unaudited):
|
| | | | | ||||||||||||||||||||
Net income (loss) per unit | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted
|
| | | | 166 | | | | | | (9) | | | | | | 76 | | | | | | (22) | | |
Pro forma net income (loss) per unit | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted
|
| | | | 127 | | | | | | (9) | | | | | | 58 | | | | | | (22) | | |
Weighted average units outstanding | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted
|
| | | | 100 | | | | | | 100 | | | | | | 100 | | | | | | 100 | | |
Other Data: | | | | | | ||||||||||||||||||||
Adjusted EBITDA(1)
|
| | | $ | 23,784 | | | | | $ | 4,040 | | | | | $ | 17,493 | | | | | $ | 7,337 | | |
Adjusted EBITDA Margin(2)
|
| | | | 38.9% | | | | | | 18.3% | | | | | | 27.9% | | | | | | 17.8% | | |
Number of procedure rooms as of the end of the period
|
| | | | 25 | | | | | | 18 | | | | | | 23 | | | | | | 16 | | |
Number of centers as of the end of the period
|
| | | | 15 | | | | | | 11 | | | | | | 14 | | | | | | 10 | | |
Cases
|
| | | | 5,422 | | | | | | 2,169 | | | | | | 5,885 | | | | | | 3,865 | | |
| | |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||
| | |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||
Revenue per case
|
| | | $ | 11,270 | | | | | $ | 10,183 | | | | | $ | 10,665 | | | | | $ | 10,669 | | |
Same-center case growth
|
| | | | 110.2% | | | | | | N/A | | | | | | 9.8% | | | | | | N/A | | |
Same-center revenue per case growth
|
| | | | 9.5% | | | | | | N/A | | | | | | (0.6)% | | | | | | N/A | | |
| | |
June 30,
|
| |
December 31,
|
| ||||||||||||
| | |
2021
|
| |
2020
|
| |
2019
|
| |||||||||
Consolidated Balance Sheet Data: | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 16,848 | | | | | $ | 10,379 | | | | | $ | 5,128 | | |
Total current assets
|
| | | | 17,546 | | | | | | 11,563 | | | | | | 6,587 | | |
Total assets
|
| | | $ | 185,300 | | | | | $ | 179,610 | | | | | $ | 171,502 | | |
Current portion of long-term debt
|
| | | $ | 850 | | | | | $ | 400 | | | | | $ | 400 | | |
Long-term debt, net
|
| | | | 82,123 | | | | | | 32,119 | | | | | | 32,308 | | |
Total liabilities
|
| | | | 108,582 | | | | | | 55,934 | | | | | | 51,111 | | |
Total member’s equity
|
| | | $ | 76,718 | | | | | $ | 123,676 | | | | | $ | 120,391 | | |
| | |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||
Net Income (Loss)
|
| | | $ | 16,648 | | | | | $ | (908) | | | | | $ | 7,577 | | | | | $ | (2,212) | | |
Plus | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 3,023 | | | | | | 2,733 | | | | | | 5,641 | | | | | | 4,960 | | |
Interest expense, net
|
| | | | 1,757 | | | | | | 1,247 | | | | | | 2,456 | | | | | | 2,875 | | |
Loss on debt modification
|
| | | | 682 | | | | | | — | | | | | | — | | | | | | — | | |
Pre-opening de novo and relocation costs
|
| | | | 982 | | | | | | 440 | | | | | | 879 | | | | | | 391 | | |
Restructuring and related severance costs
|
| | | | 270 | | | | | | 115 | | | | | | 115 | | | | | | 482 | | |
Sponsor management fee
|
| | | | 250 | | | | | | 250 | | | | | | 500 | | | | | | 500 | | |
Unit-based compensation
|
| | | | 172 | | | | | | 163 | | | | | | 325 | | | | | | 341 | | |
Adjusted EBITDA
|
| | | $ | 23,784 | | | | | $ | 4,040 | | | | | $ | 17,493 | | | | | $ | 7,337 | | |
Adjusted EBITDA Margin
|
| | | | 38.9% | | | | | | 18.3% | | | | | | 27.9% | | | | | | 17.8% | | |
| | |
As of June 30, 2021
|
| |||||||||
($ in thousands)
|
| |
Historical
|
| |
Adjusted
|
| ||||||
Cash and cash equivalents
|
| | | $ | 16,848 | | | | | $ | 27,498 | | |
Debt: | | | | | | | | | | | | | |
Term loan
|
| | | $ | 82,973 | | | | | $ | 82,973 | | |
Member’s equity
|
| | | | 76,718 | | | | | $ | 87,368 | | |
Total capitalization
|
| | | $ | 159,691 | | | | | $ | 170,341 | | |
|
Assumed initial public offering price per share
|
| | | | | | | | | $ | 16.00 | | |
|
Pro forma net tangible book value per share as of June 30, 2021
|
| | | $ | (1.18) | | | | | | | | |
|
Increase in net tangible book value per share attributable to new investors in this offering
|
| | | | 0.23 | | | | | | | | |
|
Pro forma and as-adjusted net tangible book value per share after this offering
|
| | | | | | | | | | (0.95) | | |
|
Dilution per share to new investors
|
| | | | | | | | | $ | (16.95) | | |
| | |
Shares Purchased
|
| |
Total Consideration
|
| |
Average
Price Per Share |
| |||||||||||||||||||||
| | |
Number
|
| |
Percent
|
| |
Amount
|
| |
Percent
|
| ||||||||||||||||||
Existing Owners
|
| | | | 45,359,177 | | | | | | 81.9% | | | | | | 151,000,000 | | | | | | 48.6% | | | | | $ | 3.33 | | |
New investors
|
| | | | 10,000,000 | | | | | | 18.1% | | | | | | 160,000,000 | | | | | | 51.4% | | | | | $ | 16.00 | | |
Total
|
| | | | 55,359,177 | | | | | | 100.0% | | | | | | 311,000,000 | | | | | | 100.0% | | | | | | | | |
| | |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||
| | |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||
Consolidated Statements of Operations Data:
($ in thousands) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Revenue
|
| | | $ | 61,108 | | | | | $ | 22,086 | | | | | $ | 62,766 | | | | | $ | 41,236 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of service
|
| | | | 20,008 | | | | | | 8,983 | | | | | | 23,471 | | | | | | 15,488 | | |
Selling, general and administrative
|
| | | | 18,990 | | | | | | 10,031 | | | | | | 23,621 | | | | | | 20,125 | | |
Loss on debt modification
|
| | | | 682 | | | | | | — | | | | | | — | | | | | | — | | |
Depreciation and amortization
|
| | | | 3,023 | | | | | | 2,733 | | | | | | 5,641 | | | | | | 4,960 | | |
Total operating expenses
|
| | | | 42,703 | | | | | | 21,747 | | | | | | 52,733 | | | | | | 40,573 | | |
Income from operations
|
| | | | 18,405 | | | | | | 339 | | | | | | 10,033 | | | | | | 663 | | |
Interest expense, net
|
| | | | 1,757 | | | | | | 1,247 | | | | | | 2,456 | | | | | | 2,875 | | |
Net income (loss)
|
| | | | 16,648 | | | | | | (908) | | | | | | 7,577 | | | | | | (2,212) | | |
Pro forma income tax expense (unaudited)
|
| | | | 3,975 | | | | | | — | | | | | | 1,827 | | | | | | — | | |
Pro forma net income (loss) (unaudited)
|
| | | $ | 12,673 | | | | | $ | (908) | | | | | $ | 5,750 | | | | | $ | (2,212) | | |
Consolidated Statements of Cash Flow Data: | | | | | | | | | | | | | | | | | | | | | |||||
Net cash provided by operating activities
|
| | | $ | 23,814 | | | | | $ | 1,683 | | | | | $ | 13,957 | | | | | $ | 4,938 | | |
Net cash used in investing activities
|
| | | | (3,149) | | | | | | (1,720) | | | | | | (3,689) | | | | | | (4,439) | | |
Net cash used in financing activities
|
| | | | (14,196) | | | | | | (2,034) | | | | | | (5,017) | | | | | | (783) | | |
Net income (loss) per unit data (unaudited):
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) per unit | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted
|
| | | | 166 | | | | | | (9) | | | | | | 76 | | | | | | (22) | | |
Pro forma net income (loss) per unit | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted
|
| | | | 127 | | | | | | (9) | | | | | | 58 | | | | | | (22) | | |
Weighted average units outstanding | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted
|
| | | | 100 | | | | | | 100 | | | | | | 100 | | | | | | 100 | | |
| | |
June 30,
|
| |
December 31,
|
| ||||||||||||
| | |
2021
|
| |
2020
|
| |
2019
|
| |||||||||
Consolidated Balance Sheet Data: | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 16,848 | | | | | $ | 10,379 | | | | | $ | 5,128 | | |
Total current assets
|
| | | | 17,546 | | | | | | 11,563 | | | | | | 6,587 | | |
Total assets
|
| | | $ | 185,300 | | | | | $ | 179,610 | | | | | $ | 171,502 | | |
Current portion of long-term debt
|
| | | $ | 850 | | | | | $ | 400 | | | | | $ | 400 | | |
Long-term debt, net
|
| | | | 82,123 | | | | | | 32,119 | | | | | | 32,308 | | |
Total liabilities
|
| | | | 108,582 | | | | | | 55,934 | | | | | | 51,111 | | |
Total member’s equity
|
| | | $ | 76,718 | | | | | $ | 123,676 | | | | | $ | 120,391 | | |
| | |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||
|
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||||
Cases
|
| | | | 5,422 | | | | | | 2,169 | | | | | | 5,885 | | | | | | 3,865 | | |
Case growth
|
| | | | 150.0% | | | | | | N/A | | | | | | 52.3% | | | | | | N/A | | |
Revenue per case
|
| | | $ | 11,270 | | | | | $ | 10,183 | | | | | $ | 10,665 | | | | | $ | 10,669 | | |
Revenue per case growth
|
| | | | 10.7% | | | | | | N/A | | | | | | 0.0% | | | | | | N/A | | |
Number of total facilities
|
| | | | 15 | | | | | | 11 | | | | | | 14 | | | | | | 10 | | |
Number of total procedure rooms
|
| | | | 25 | | | | | | 18 | | | | | | 23 | | | | | | 16 | | |
| | |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||
|
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||||
Cases
|
| | | | 4,559 | | | | | | 2,169 | | | | | | 4,074 | | | | | | 3,712 | | |
Case growth
|
| | | | 110.2% | | | | | | N/A | | | | | | 9.8% | | | | | | N/A | | |
Revenue per case
|
| | | $ | 11,149 | | | | | $ | 10,182 | | | | | $ | 10,603 | | | | | $ | 10,669 | | |
Revenue per case growth
|
| | | | 9.5% | | | | | | N/A | | | | | | -0.6% | | | | | | N/A | | |
Number of total facilities
|
| | | | 11 | | | | | | 11 | | | | | | 7 | | | | | | 7 | | |
Number of total procedure rooms
|
| | | | 18 | | | | | | 18 | | | | | | 10 | | | | | | 10 | | |
($ in thousands)
|
| |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||
|
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||||
Net income (loss)
|
| | | $ | 16,648 | | | | | $ | (908) | | | | | $ | 7,577 | | | | | $ | (2,212) | | |
Plus
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 3,023 | | | | | | 2,733 | | | | | | 5,641 | | | | | | 4,960 | | |
Interest expense, net
|
| | | | 1,757 | | | | | | 1,247 | | | | | | 2,456 | | | | | | 2,875 | | |
Loss on debt modification
|
| | | | 682 | | | | | | — | | | | | | — | | | | | | — | | |
Pre-opening de novo and relocation costs
|
| | | | 982 | | | | | | 440 | | | | | | 879 | | | | | | 391 | | |
Restructuring and related severance costs
|
| | | | 270 | | | | | | 115 | | | | | | 115 | | | | | | 482 | | |
Sponsor management fee
|
| | | | 250 | | | | | | 250 | | | | | | 500 | | | | | | 500 | | |
Unit-based compensation
|
| | | | 172 | | | | | | 163 | | | | | | 325 | | | | | | 341 | | |
Adjusted EBITDA
|
| | | $ | 23,784 | | | | | $ | 4,040 | | | | | $ | 17,493 | | | | | $ | 7,337 | | |
Adjusted EBITDA Margin
|
| | | | 38.9% | | | | | | 18.3% | | | | | | 27.9% | | | | | | 17.8% | | |
($ in thousands)
|
| |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||||||||||||||||||||||||||
|
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||||||||||||||||||||||||||||
|
Amount
|
| |
% of
Revenues |
| |
Amount
|
| |
% of
Revenues |
| |
Amount
|
| |
% of
Revenues |
| |
Amount
|
| |
% of
Revenues |
| ||||||||||||||||||||||||||
Revenue
|
| | | $ | 61,108 | | | | | | 100.0% | | | | | $ | 22,086 | | | | | | 100.0% | | | | | $ | 62,766 | | | | | | 100.0% | | | | | $ | 41,236 | | | | | | 100.0% | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of service
|
| | | | 20,008 | | | | | | 32.7% | | | | | | 8,983 | | | | | | 40.7% | | | | | | 23,471 | | | | | | 37.4% | | | | | | 15,488 | | | | | | 37.6% | | |
Selling, general and administrative
|
| | | | 18,990 | | | | | | 31.1% | | | | | | 10,031 | | | | | | 45.4% | | | | | | 23,621 | | | | | | 37.6% | | | | | | 20,125 | | | | | | 48.8% | | |
Loss on debt modification
|
| | | | 682 | | | | | | 1.1% | | | | | | — | | | | | | 0.0% | | | | | | — | | | | | | 0.0% | | | | | | — | | | | | | 0.0% | | |
Depreciation and amortization
|
| | | | 3,023 | | | | | | 4.9% | | | | | | 2,733 | | | | | | 12.4% | | | | | | 5,641 | | | | | | 9.0% | | | | | | 4,960 | | | | | | 12.0% | | |
Total operating expenses
|
| | | | 42,703 | | | | | | 69.9% | | | | | | 21,747 | | | | | | 98.5% | | | | | | 52,733 | | | | | | 84.0% | | | | | | 40,573 | | | | | | 98.4% | | |
Income from operations
|
| | | | 18,405 | | | | | | 30.1% | | | | | | 339 | | | | | | 1.5% | | | | | | 10,033 | | | | | | 16.0% | | | | | | 663 | | | | | | 1.6% | | |
Interest expense, net
|
| | | | 1,757 | | | | | | 2.9% | | | | | | 1,247 | | | | | | 5.6% | | | | | | 2,456 | | | | | | 3.9% | | | | | | 2,875 | | | | | | 7.0% | | |
Net income (loss)
|
| | | | 16,648 | | | | | | 27.2% | | | | | | (908) | | | | | | (4.1%) | | | | | | 7,577 | | | | | | 12.1% | | | | | | (2,212) | | | | | | (5.4%) | | |
Pro forma income tax expense (unaudited)
|
| | | | 3,975 | | | | | | 6.5% | | | | | | — | | | | | | 0.0% | | | | | | 1,827 | | | | | | 2.9% | | | | | | — | | | | | | 0.0% | | |
Pro forma net income (loss) (unaudited)
|
| | | $ | 12,673 | | | | | | 20.7% | | | | | $ | (908) | | | | | | (4.1%) | | | | | $ | 5,750 | | | | | | 9.2% | | | | | $ | (2,212) | | | | | | (5.4%) | | |
($ in thousands)
|
| |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||||||||||||||
|
2021
|
| |
2020
|
| | | | | | | |
2020
|
| |
2019
|
| | | | | | | ||||||||||||||
|
Amount
|
| |
Amount
|
| |
$ Change
|
| |
Amount
|
| |
Amount
|
| |
$ Change
|
| ||||||||||||||||||||
Revenue
|
| | | $ | 61,108 | | | | | $ | 22,086 | | | | | $ | 39,022 | | | | | $ | 62,766 | | | | | $ | 41,236 | | | | | $ | 21,530 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of service
|
| | | | 20,008 | | | | | | 8,983 | | | | | | 11,025 | | | | | | 23,471 | | | | | | 15,488 | | | | | | 7,983 | | |
Selling, general and administrative
|
| | | | 18,990 | | | | | | 10,031 | | | | | | 8,959 | | | | | | 23,621 | | | | | | 20,125 | | | | | | 3,496 | | |
Loss on debt modification
|
| | | | 682 | | | | | | — | | | | | | 682 | | | | | | — | | | | | | — | | | | | | — | | |
Depreciation and amortization
|
| | | | 3,023 | | | | | | 2,733 | | | | | | 290 | | | | | | 5,641 | | | | | | 4,960 | | | | | | 681 | | |
Total operating expenses
|
| | | | 42,703 | | | | | | 21,747 | | | | | | 20,956 | | | | | | 52,733 | | | | | | 40,573 | | | | | | 12,160 | | |
Income from operations
|
| | | | 18,405 | | | | | | 339 | | | | | | 18,066 | | | | | | 10,033 | | | | | | 663 | | | | | | 9,370 | | |
($ in thousands)
|
| |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||||||||||||||
|
2021
|
| |
2020
|
| | | | | | | |
2020
|
| |
2019
|
| | | | | | | ||||||||||||||
|
Amount
|
| |
Amount
|
| |
$ Change
|
| |
Amount
|
| |
Amount
|
| |
$ Change
|
| ||||||||||||||||||||
Interest expense, net
|
| | | | 1,757 | | | | | | 1,247 | | | | | | 510 | | | | | | 2,456 | | | | | | 2,875 | | | | | | (419) | | |
Net income (loss)
|
| | | | 16,648 | | | | | | (908) | | | | | | 17,556 | | | | | | 7,577 | | | | | | (2,212) | | | | | | 9,789 | | |
Pro forma income tax
expense (unaudited) |
| | | | 3,975 | | | | | | — | | | | | | 3,975 | | | | | | 1,827 | | | | | | — | | | | | | 1,827 | | |
Pro forma net income
(loss) (unaudited) |
| | | $ | 12,673 | | | | | $ | (908) | | | | | $ | 13,581 | | | | | $ | 5,750 | | | | | $ | (2,212) | | | | | $ | 7,962 | | |
|
| | |
Six Months
Ended June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||
Cash Flows Provided By (Used For): | | | | | | | | | | | | | | | | ||||||||||
Operating activities
|
| | | $ | 23,814 | | | | | $ | 1,683 | | | | | $ | 13,957 | | | | | $ | 4,938 | | |
Investing activities
|
| | | | (3,149) | | | | | | (1,720) | | | | | | (3,689) | | | | | | (4,439) | | |
Financing activities
|
| | | | (14,196) | | | | | | (2,034) | | | | | | (5,017) | | | | | | (783) | | |
Net increase (decrease) in cash and cash equivalents
|
| | | | 6,469 | | | | | | (2,071) | | | | | | 5,251 | | | | | | (284) | | |
| | |
Payments due by Period
|
| |||||||||||||||||||||||||||
($ in thousands)
|
| |
Total
|
| |
Less than 1 Year
|
| |
1-3 Years
|
| |
4-5 Years
|
| |
More than 5 Years
|
| |||||||||||||||
Debt – principal(1) | | | | $ | 85,100 | | | | | $ | 838 | | | | | $ | 84,262 | | | | | $ | — | | | | | $ | — | | |
Interest expense(1)(2)
|
| | | | 12,873 | | | | | | 4,059 | | | | | | 8,813 | | | | | | | | | | | | | | |
Operating lease agreements
|
| | | | 19,992 | | | | | | 3,321 | | | | | | 8,809 | | | | | | 5,245 | | | | | | 2,617 | | |
Total
|
| | | $ | 117,965 | | | | | $ | 8,218 | | | | | $ | 101,884 | | | | | $ | 5,245 | | | | | $ | 2,617 | | |
| | |
2019
|
| |||
Expected volatility
|
| | | | 26.6% | | |
Expected term
|
| | | | 5.0 | | |
Risk-free interest rate
|
| | | | 2.27% | | |
Expected dividend yield
|
| | | | 0% | | |
|
1. Pain Management
|
| |
|
| |
Prior to the procedure, patient is given a sedative cocktail and local anesthesia via air pressure from a needleless jet injector.
*Patient remains fully awake during the procedure
|
|
|
2. Access Point Creation
|
| |
|
| |
One to three entryways are created by the jet injector, which are widened to 2mm (freckle-sized) by means of a biopsy punch.
|
|
|
3. Local Numbing
|
| |
|
| |
A thin cannula is inserted in each entryway, at which point a local numbing solution is dispersed subdermally to the target areas.
|
|
|
4. Laser Ablation
|
| |
|
| |
Laser ablation, which is the use of the heat from laser light to destroy unwanted cells, is then applied to soften the fat cells for extraction. As a byproduct of the laser’s heat, the skin in the treated area is tightened for post-surgery effects.
|
|
|
5. Fat Removal Process
|
| |
|
| |
Proprietary fat removal process uses industry accepted, FDA approved tools to grab, separate, and remove fat cells.
An FDA-approved handpiece drives cannula 1,000 times per minute in a corkscrew motion to remove fat cells, without harming surrounding tissue and structures.
The amount of fat removed via the AirSculpt® method depends on patient body size, desired outcomes and state regulations. After the procedure is complete, a piece of dry gauze is used to cover the entryway to protect against infection.
|
|
|
|
| |
|
|
|
Scottsdale, AZ
|
| |
Beverly Hills, CA
|
|
State
|
| |
City
|
| |
Number of
Procedure Rooms |
|
Arizona | | |
Scottsdale
|
| |
1
|
|
California | | |
Beverly Hills
|
| |
2
|
|
California | | |
Sacramento
|
| |
1
|
|
California | | |
San Diego
|
| |
2
|
|
Colorado | | |
Denver
|
| |
2
|
|
Florida | | |
Orlando
|
| |
2
|
|
Georgia | | |
Atlanta
|
| |
2
|
|
Illinois | | |
Chicago
|
| |
1
|
|
Minnesota | | |
Minneapolis
|
| |
2
|
|
New York | | |
New York
|
| |
2
|
|
North Carolina | | |
Charlotte
|
| |
2
|
|
Tennessee | | |
Nashville
|
| |
2
|
|
Texas | | |
Dallas
|
| |
1
|
|
Texas | | |
Houston
|
| |
1
|
|
Washington | | |
Seattle
|
| |
2
|
|
Virginia | | |
Vienna
|
| |
2
|
|
Name
|
| |
Age
|
| |
Position
|
|
Dr. Aaron Rollins
|
| |
46
|
| | Chief Executive Officer and Director | |
Adam Feinstein
|
| |
49
|
| | Non-Executive Chairman of the Board | |
Ronald P. Zelhof
|
| |
57
|
| | Chief Operating Officer and President | |
Dennis Dean
|
| |
49
|
| | Chief Financial Officer | |
Daniel Sollof
|
| |
38
|
| | Director | |
Caroline Chu
|
| |
41
|
| | Director | |
Thomas Aaron
|
| |
59
|
| | Director | |
Kenneth Higgins
|
| |
56
|
| | Director | |
Pamela Netzky
|
| |
46
|
| | Director | |
Name and Principal Position
|
| |
Year
|
| |
Salary
($) |
| |
Bonus
($)(1) |
| |
Non-Equity
Incentive Plan Compensation ($)(2) |
| |
All Other
Compensation ($)(3) |
| |
Total
($) |
| ||||||||||||||||||
Dr. Aaron Rollins
Chief Executive Officer |
| | | | 2020 | | | | | | 300,000 | | | | | | 150,000 | | | | | | 140,241 | | | | | | 8,569 | | | | | | 598,810 | | |
Ronald P. Zelhof
Chief Operating Officer and President |
| | | | 2020 | | | | | | 300,000 | | | | | | 120,000 | | | | | | — | | | | | | 13,328 | | | | | | 433,328 | | |
| | | | | | | | |
Stock Awards
|
| |||||||||
Name
|
| |
Grant Date
|
| |
Number of
Shares or Units of Stock That Have Not Vested (#)(1) |
| |
Market Value of
Shares or Units of Stock That Have Not Vested ($)(2) |
| |||||||||
Ronald P. Zelhof
|
| | | | 3/31/2019 | | | | | | 597,953 | | | | | $ | 9,567,248 | | |
| | |
Common Stock
Beneficially Owned Prior to the Offering |
| |
Common
Stock to be Sold in the Offering |
| |
Common Stock
Beneficially Owned After the Offering (assuming no option exercise) |
| |
Common Stock
Beneficially Owned After the Offering (assuming full option exercise) |
| ||||||||||||||||||||||||||||||
Name and Address of
Beneficial Owner |
| |
Number
|
| |
Percentage
|
| |
Number
|
| |
Number
|
| |
Percentage
|
| |
Number
|
| |
Percentage
|
| |||||||||||||||||||||
Directors, Director Nominees and Named Executive Officers:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Dr. Aaron Rollins
|
| | | | 14,044,532 | | | | | | 26.1 | | | | | | — | | | | | | 14,044,532 | | | | | | 25.4 | | | | | | 13,294,532 | | | | | | 24.0 | | |
Adam Feinstein(1)
|
| | | | 34,021,876 | | | | | | 63.2 | | | | | | 7,967,628 | | | | | | 26,054,249 | | | | | | 47.1 | | | | | | 26,054,249 | | | | | | 47.1 | | |
Ronald P. Zelhof
|
| | | | 597,953 | | | | | | 1.1 | | | | | | — | | | | | | 597,953 | | | | | | 1.1 | | | | | | 597,953 | | | | | | 1.1 | | |
Daniel Sollof
|
| | | | — | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | — | | | | | | * | | |
Caroline Chu
|
| | | | — | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | — | | | | | | * | | |
Thomas Aaron
|
| | | | — | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | — | | | | | | * | | |
Kenneth Higgins
|
| | | | — | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | — | | | | | | * | | |
Pamela Netzky
|
| | | | — | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | — | | | | | | * | | |
All executive officers,
directors and director nominees as a group (9 persons) |
| | | | 48,664,361 | | | | | | 90.4 | | | | | | 7,967,628 | | | | | | 40,696,734 | | | | | | 73.5 | | | | | | 39,946,734 | | | | | | 72.2 | | |
Other Selling Stockholders:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Vesey Street Capital Partners and affiliated entities(1)
|
| | | | 34,021,876 | | | | | | 63.2 | | | | | | 7,967,628 | | | | | | 26,054,249 | | | | | | 47.1 | | | | | | 26,054,249 | | | | | | 47.1 | | |
J. Christopher
Burch(2) |
| | | | 3,566,238 | | | | | | 6.6 | | | | | | 469,872 | | | | | | 3,096,366 | | | | | | 5.6 | | | | | | 2,346,366 | | | | | | 4.2 | | |
Name
|
| |
Number of Shares
|
| |||
Morgan Stanley & Co. LLC
|
| | | | | | |
Piper Sandler & Co.
|
| | | | | | |
SVB Leerink LLC
|
| | | | | | |
First Liberties Securities, Inc. dba First Liberties Financial
|
| | |||||
Raymond James & Associates, Inc.
|
| | | | | | |
Total:
|
| | | | 10,000,000 | | |
| | | | | | | | |
Total
|
| |||||||||
| | |
Per
Share |
| |
No
Exercise |
| |
Full
Exercise |
| |||||||||
Public offering price
|
| | | $ | | | | | $ | | | | | $ | | | |||
Underwriting discounts and commissions(1)
|
| | | $ | | | | | $ | | | | | $ | | | |||
Proceeds, before expenses, to us
|
| | | $ | | | | | $ | | | | | $ | | | |||
Proceeds, before expenses, to the selling stockholders
|
| | | $ | | | | | $ | | | | | $ | | | |
| | |
Page(s)
|
| |||
Audited Financial Statements | | | |||||
| | | | F-2 | | | |
| | | | F-3 | | | |
| | | | F-4 | | | |
EBS Intermediate Parent LLC and Subsidiaries
|
| ||||||
Audited Consolidated Financial Statements | | | | | | | |
| | | | F-5 | | | |
| | | | F-6 | | | |
| | | | F-7 | | | |
| | | | F-8 | | | |
| | | | F-9 | | | |
| | | | F-10 | | | |
Unaudited Interim Condensed Consolidated Financial Statements | | | | | | | |
| | | | F-23 | | | |
| | | | F-24 | | | |
| | | | F-25 | | | |
| | | | F-26 | | | |
| | | | F-27 | | |
| | |
June 30,
2021 |
| |||
Stockholder’s Equity | | | |||||
Common stock, $0.0001 par value, 1,000,000 shares authorized, 100 shares outstanding
|
| | | $ | — | | |
Accumulated paid in capital
|
| | | | 10 | | |
Stockholder receivable
|
| | | | (10) | | |
Total stockholder’s equity
|
| | | $ | — | | |
($000s)
|
| |
2020
|
| |
2019
|
| ||||||
Assets | | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 10,379 | | | | | $ | 5,128 | | |
Prepaid expenses and other current assets
|
| | | | 1,184 | | | | | | 1,459 | | |
Total current assets
|
| | | | 11,563 | | | | | | 6,587 | | |
Property and equipment, net
|
| | | | 7,108 | | | | | | 4,306 | | |
Other long-term assets
|
| | | | 1,544 | | | | | | 1,339 | | |
Right of use operating lease assets
|
| | | | 17,053 | | | | | | 12,174 | | |
Intangible assets, net
|
| | | | 60,608 | | | | | | 65,362 | | |
Goodwill
|
| | | | 81,734 | | | | | | 81,734 | | |
Total assets
|
| | | $ | 179,610 | | | | | $ | 171,502 | | |
Liabilities and Member’s Equity | | | | | | | | | | | | | |
Current liabilities | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 1,095 | | | | | $ | 2,114 | | |
Accrued payroll and benefits
|
| | | | 1,258 | | | | | | 534 | | |
Current portion of long-term debt
|
| | | | 400 | | | | | | 400 | | |
Deferred revenue and patient deposits
|
| | | | 3,233 | | | | | | 3,188 | | |
Accrued and other current liabilities
|
| | | | 581 | | | | | | 174 | | |
Current right of use operating lease liabilities
|
| | | | 2,890 | | | | | | 1,943 | | |
Total current liabilities
|
| | | | 9,457 | | | | | | 8,353 | | |
Long-term debt, net
|
| | | | 32,119 | | | | | | 32,308 | | |
Long-term right of use operating lease liability
|
| | | | 14,358 | | | | | | 10,450 | | |
Total liabilities
|
| | | | 55,934 | | | | | | 51,111 | | |
Commitments and contingent liabilities (Note 9) | | | | | | | | | | | | | |
Member’s equity
|
| | | | 123,676 | | | | | | 120,391 | | |
Total liabilities and member’s equity
|
| | | $ | 179,610 | | | | | $ | 171,502 | | |
($000s)
|
| |
2020
|
| |
2019
|
| ||||||
Revenue
|
| | | $ | 62,766 | | | | | $ | 41,236 | | |
Operating expenses: | | | | | | | | | | | | | |
Cost of service (exclusive of depreciation and amortization shown below)
|
| | | | 23,471 | | | | | | 15,488 | | |
Selling, general and administrative
|
| | | | 23,621 | | | | | | 20,125 | | |
Depreciation and amortization
|
| | | | 5,641 | | | | | | 4,960 | | |
Total operating expenses
|
| | | | 52,733 | | | | | | 40,573 | | |
Income from operations
|
| | | | 10,033 | | | | | | 663 | | |
Interest expense, net
|
| | | | 2,456 | | | | | | 2,875 | | |
Net income (loss)
|
| | | | 7,577 | | | | | | (2,212) | | |
Pro forma income tax expense (unaudited)
|
| | | | 1,827 | | | | | | — | | |
Pro forma net income (loss) (unaudited)
|
| | | $ | 5,750 | | | | | $ | (2,212) | | |
($000s)
|
| | | | | | |
Balance at December 31, 2018
|
| | | $ | 122,548 | | |
Distributions
|
| | | | (283) | | |
Unit-based compensation
|
| | | | 341 | | |
Net loss
|
| | | | (2,212) | | |
Other
|
| | | | (3) | | |
Balance at December 31, 2019
|
| | | | 120,391 | | |
Distributions
|
| | | | (4,617) | | |
Unit-based compensation
|
| | | | 325 | | |
Net income
|
| | | | 7,577 | | |
Balance at December 31, 2020
|
| | | $ | 123,676 | | |
($000s)
|
| |
2020
|
| |
2019
|
| ||||||
Cash flows from operating activities | | | | | | | | | | | | | |
Net income (loss)
|
| | | $ | 7,577 | | | | | $ | (2,212) | | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
| | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 5,641 | | | | | | 4,960 | | |
Unit-based compensation
|
| | | | 325 | | | | | | 341 | | |
Non-cash interest expense; amortization of debt costs
|
| | | | 211 | | | | | | 226 | | |
Changes in assets and liabilities
|
| | | | | | | | | | | | |
Prepaid expense and other current assets
|
| | | | 275 | | | | | | (1,841) | | |
Other assets
|
| | | | (204) | | | | | | (635) | | |
Accounts payable
|
| | | | (1,019) | | | | | | 1,872 | | |
Deferred revenue and patient deposits
|
| | | | 45 | | | | | | 1,835 | | |
Accrued and other liabilities
|
| | | | 1,106 | | | | | | 392 | | |
Net cash provided by operating activities
|
| | | | 13,957 | | | | | | 4,938 | | |
Cash flows from investing activities | | | | | | | | | | | | | |
Purchases of property and equipment, net
|
| | | | (3,689) | | | | | | (4,439) | | |
Net cash used in investing activities
|
| | | | (3,689) | | | | | | (4,439) | | |
Cash flows from financing activities | | | | | | | | | | | | | |
Payment on term loan
|
| | | | (2,900) | | | | | | (500) | | |
Borrowings on term loan
|
| | | | 2,500 | | | | | | — | | |
Distribution to member
|
| | | | (4,617) | | | | | | (283) | | |
Net cash used in financing activities
|
| | | | (5,017) | | | | | | (783) | | |
Net increase (decrease) in cash and cash equivalents
|
| | | | 5,251 | | | | | | (284) | | |
Cash and cash equivalents | | | | | | | | | | | | | |
Beginning of period
|
| | | | 5,128 | | | | | | 5,412 | | |
End of period
|
| | | $ | 10,379 | | | | | $ | 5,128 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for interest
|
| | | $ | 2,293 | | | | | $ | 2,683 | | |
| | |
2020
|
| |
2019
|
| |
Useful Life
|
| ||||||
Technology and know-how
|
| | | $ | 53,600 | | | | | $ | 53,600 | | | |
15 years
|
|
Trademarks and tradenames
|
| | | | 17,700 | | | | | | 17,700 | | | |
15 years
|
|
| | | | | 71,300 | | | | | | 71,300 | | | | | |
Accumulated amortization of technology and know-how
|
| | | | (8,038) | | | | | | (4,464) | | | | | |
Accumulated amortization of tradenames and trademarks
|
| | | | (2,654) | | | | | | (1,474) | | | | | |
Total intangible assets
|
| | | $ | 60,608 | | | | | $ | 65,362 | | | | | |
| | |
2020
|
| |
2019
|
| ||||||
Medical equipment
|
| | | $ | 1,955 | | | | | $ | 533 | | |
Office and computer equipment
|
| | | | 137 | | | | | | 72 | | |
Furniture and fixtures
|
| | | | 741 | | | | | | 288 | | |
Leasehold improvements
|
| | | | 5,374 | | | | | | 3,627 | | |
Less: Accumulated depreciation and amortization
|
| | | | (1,099) | | | | | | (214) | | |
Property and equipment, net
|
| | | $ | 7,108 | | | | | $ | 4,306 | | |
| | |
2020
|
| |
2019
|
| ||||||
Term loan
|
| | | $ | 33,100 | | | | | $ | 33,500 | | |
Unamortized debt issuance costs
|
| | | | (581) | | | | | | (792) | | |
Total debt, net
|
| | | | 32,519 | | | | | | 32,708 | | |
Less: Current portion
|
| | | | (400) | | | | | | (400) | | |
Long-term debt, net
|
| | | $ | 32,119 | | | | | $ | 32,308 | | |
|
2021
|
| | | $ | 400 | | |
|
2022
|
| | | | 400 | | |
|
2023
|
| | | | 32,300 | | |
|
Total maturities
|
| | | $ | 33,100 | | |
| | |
2020
|
| |
2019
|
|
Weighted-average remaining lease term
|
| |
5 years
|
| |
4.8 years
|
|
Weight average discount rate
|
| |
4.6%
|
| |
4.1%
|
|
| | |
2020
|
| |
2019
|
| ||||||
Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | | | | | | | |
Operating cash outflows from operating leases
|
| | | $ | 2,540 | | | | | $ | 1,325 | | |
Right-of-use assets obtained in exchange for lease obligations: | | | | | | | | | | | | | |
Operating leases
|
| | | $ | 6,447 | | | | | $ | 8,910 | | |
Year ended December 31,
|
| | | | | | |
2021
|
| | | $ | 3,321 | | |
2022
|
| | | | 3,192 | | |
2023
|
| | | | 2,861 | | |
2024
|
| | | | 2,757 | | |
2025
|
| | | | 2,740 | | |
Thereafter
|
| | | | 5,121 | | |
Total lease payments
|
| | | | 19,992 | | |
Less: imputed interest
|
| | | | (2,744) | | |
Total lease obligations
|
| | | $ | 17,248 | | |
| | |
Unvested
Units |
| |
Weighted Average
Grant Date Fair Value of Units |
| ||||||
Outstanding at December 31, 2018 | | | | | — | | | | | | | | |
Granted
|
| | | | 12,363 | | | | | $ | 278.99 | | |
Vested
|
| | | | (347) | | | | | | 278.99 | | |
Outstanding at December 31, 2019
|
| | | | 12,016 | | | | | $ | 278.99 | | |
Vested
|
| | | | (1,167) | | | | | | 278.99 | | |
Outstanding at December 31, 2020
|
| | | | 10,849 | | | | | $ | 278.99 | | |
| | |
2019
|
| |||
Expected volatility
|
| | | | 26.6% | | |
Expected term
|
| | | | 5.0 | | |
Risk-free interest rate
|
| | | | 2.27% | | |
Expected dividend yield
|
| | | | 0% | | |
($000s)
|
| |
June 30,
2021 |
| |
December 31,
2020 |
| ||||||
Assets | | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 16,848 | | | | | $ | 10,379 | | |
Prepaid expenses and other current assets
|
| | | | 698 | | | | | | 1,184 | | |
Total current assets
|
| | | | 17,546 | | | | | | 11,563 | | |
Property and equipment, net
|
| | | | 10,578 | | | | | | 7,108 | | |
Other long-term assets
|
| | | | 1,709 | | | | | | 1,544 | | |
Right of use operating lease assets
|
| | | | 15,504 | | | | | | 17,053 | | |
Intangible assets, net
|
| | | | 58,229 | | | | | | 60,608 | | |
Goodwill
|
| | | | 81,734 | | | | | | 81,734 | | |
Total assets
|
| | | $ | 185,300 | | | | | $ | 179,610 | | |
Liabilities and Member’s Equity | | | | | | | | | | | | | |
Current liabilities | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 1,636 | | | | | $ | 1,095 | | |
Accrued payroll and benefits
|
| | | | 1,962 | | | | | | 1,258 | | |
Current portion of long-term debt
|
| | | | 850 | | | | | | 400 | | |
Deferred revenue and patient deposits
|
| | | | 4,998 | | | | | | 3,233 | | |
Accrued and other current liabilities
|
| | | | 1,397 | | | | | | 581 | | |
Current right of use operating lease liabilities
|
| | | | 2,899 | | | | | | 2,890 | | |
Total current liabilities
|
| | | | 13,742 | | | | | | 9,457 | | |
Long-term debt, net
|
| | | | 82,123 | | | | | | 32,119 | | |
Long-term right of use operating lease liability
|
| | | | 12,717 | | | | | | 14,358 | | |
Total liabilities
|
| | | | 108,582 | | | | | | 55,934 | | |
Commitments and contingent liabilities (Note 9) | | | | | | | | | | | | | |
Member’s equity
|
| | | | 76,718 | | | | | | 123,676 | | |
Total liabilities and member’s equity
|
| | | $ | 185,300 | | | | | $ | 179,610 | | |
($000s)
|
| |
Six Months Ended
June 30, |
| |||||||||
|
2021
|
| |
2020
|
| ||||||||
Revenue
|
| | | $ | 61,108 | | | | | $ | 22,086 | | |
Operating expenses: | | | | | | | | | | | | | |
Cost of service (exclusive of depreciation and amortization shown below)
|
| | | | 20,008 | | | | | | 8,983 | | |
Selling, general and administrative
|
| | | | 18,990 | | | | | | 10,031 | | |
Loss on debt modification
|
| | | | 682 | | | | | | — | | |
Depreciation and amortization
|
| | | | 3,023 | | | | | | 2,733 | | |
Total operating expenses
|
| | | | 42,703 | | | | | | 21,747 | | |
Income from operations
|
| | | | 18,405 | | | | | | 339 | | |
Interest expense, net
|
| | | | 1,757 | | | | | | 1,247 | | |
Net income (loss)
|
| | | | 16,648 | | | | | | (908) | | |
Pro forma income tax expense
|
| | | | 3,975 | | | | | | — | | |
Pro forma net income (loss)
|
| | | $ | 12,673 | | | | | $ | (908) | | |
($000s)
|
| | | | | | |
Balance at December 31, 2019
|
| | | $ | 120,391 | | |
Distributions
|
| | | | (4,334) | | |
Unit-based compensation
|
| | | | 163 | | |
Net loss
|
| | | | (908) | | |
Balance at June 30, 2020
|
| | | $ | 115,312 | | |
Balance at December 31, 2020
|
| | | $ | 123,676 | | |
Distributions
|
| | | | (63,778) | | |
Unit-based compensation
|
| | | | 172 | | |
Net income
|
| | | | 16,648 | | |
Balance at June 30, 2021
|
| | | $ | 76,718 | | |
($000s)
|
| |
Six Months Ended
June 30, |
| |||||||||
|
2021
|
| |
2020
|
| ||||||||
Cash flows from operating activities | | | | | | | | | | | | | |
Net income (loss)
|
| | | $ | 16,648 | | | | | $ | (908) | | |
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
| | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 3,023 | | | | | | 2,733 | | |
Unit-based compensation
|
| | | | 172 | | | | | | 163 | | |
Non-cash interest expense; amortization of debt costs
|
| | | | 191 | | | | | | 106 | | |
Loss on debt modification
|
| | | | 682 | | | | | | — | | |
Changes in assets and liabilities
|
| | | | | | | | | | | | |
Prepaid expense and other current assets
|
| | | | (478) | | | | | | 560 | | |
Other assets
|
| | | | 1,384 | | | | | | (2,964) | | |
Accounts payable
|
| | | | 541 | | | | | | (829) | | |
Deferred revenue and patient deposits
|
| | | | 1,765 | | | | | | (699) | | |
Accrued and other liabilities
|
| | | | (114) | | | | | | 3,521 | | |
Net cash provided by operating activities
|
| | | | 23,814 | | | | | | 1,683 | | |
Cash flows from investing activities | | | | | | | | | | | | | |
Purchases of property and equipment, net
|
| | | | (3,149) | | | | | | (1,720) | | |
Net cash used in investing activities
|
| | | | (3,149) | | | | | | (1,720) | | |
Cash flows from financing activities | | | | | | | | | | | | | |
Payment on term loan
|
| | | | (413) | | | | | | (200) | | |
Borrowings on term loan
|
| | | | 49,995 | | | | | | 2,500 | | |
Distribution to member
|
| | | | (63,778) | | | | | | (4,334) | | |
Net cash used in financing activities
|
| | | | (14,196) | | | | | | (2,034) | | |
Net increase (decrease) in cash and cash equivalents
|
| | | | 6,469 | | | | | | (2,071) | | |
Cash and cash equivalents | | | | | | | | | | | | | |
Beginning of period
|
| | | | 10,379 | | | | | | 5,128 | | |
End of period
|
| | | $ | 16,848 | | | | | $ | 3,057 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for interest
|
| | | $ | 1,570 | | | | | $ | 1,143 | | |
| | |
June 30,
2021 |
| |
December 31,
2020 |
| |
Useful Life
|
| ||||||
Technology and know-how
|
| | | $ | 53,600 | | | | | $ | 53,600 | | | |
15 years
|
|
Trademarks and tradenames
|
| | | | 17,700 | | | | | | 17,700 | | | |
15 years
|
|
| | | | | 71,300 | | | | | | 71,300 | | | | | |
Accumulated amortization of technology and know-how
|
| | | | (9,826) | | | | | | (8,038) | | | | | |
Accumulated amortization of tradenames and trademarks
|
| | | | (3,245) | | | | | | (2,654) | | | | | |
Total intangible assets
|
| | | $ | 58,229 | | | | | $ | 60,608 | | | | | |
| | |
June 30,
2021 |
| |
December 31,
2020 |
| ||||||
Medical equipment
|
| | | $ | 2,332 | | | | | $ | 1,955 | | |
Office and computer equipment
|
| | | | 164 | | | | | | 137 | | |
Furniture and fixtures
|
| | | | 1,016 | | | | | | 741 | | |
Leasehold improvements
|
| | | | 6,649 | | | | | | 5,374 | | |
Construction in progress
|
| | | | 2,152 | | | | | | — | | |
Less: Accumulated depreciation and amortization
|
| | | | (1,735) | | | | | | (1,099) | | |
Property and equipment, net
|
| | | $ | 10,578 | | | | | $ | 7,108 | | |
| | |
June 30,
2021 |
| |
December 31,
2020 |
| ||||||
Term loan
|
| | | $ | 84,688 | | | | | $ | 33,100 | | |
Unamortized debt issuance costs
|
| | | | (1,715) | | | | | | (581) | | |
Total debt, net
|
| | | | 82,973 | | | | | | 32,519 | | |
Less: Current portion
|
| | | | (850) | | | | | | (400) | | |
Long-term debt, net
|
| | | $ | 82,123 | | | | | $ | 32,119 | | |
|
2021
|
| | | $ | 425 | | |
|
2022
|
| | | | 850 | | |
|
2023
|
| | | | 83,413 | | |
|
Total maturities
|
| | | $ | 84,688 | | |
| | |
June 30,
2021 |
| |
June 30,
2020 |
| ||||||
Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | | | | | | | |
Operating cash outflows from operating leases
|
| | | $ | 1,494 | | | | | $ | 1,146 | | |
Right-of-use assets obtained in exchange for lease obligations: | | | | | | | | | | | | | |
Operating leases
|
| | | $ | — | | | | | $ | 3,775 | | |
| Year ended December 31, | | | | | | | |
|
2021 (excluding the six months ended June 30, 2021)
|
| | | $ | 1,708 | | |
|
2022
|
| | | | 3,340 | | |
|
2023
|
| | | | 3,352 | | |
|
2024
|
| | | | 3,307 | | |
|
2025
|
| | | | 3,345 | | |
|
Thereafter
|
| | | | 5,584 | | |
|
Total lease payments
|
| | | | 20,636 | | |
|
Less: imputed interest
|
| | | | (5,020) | | |
|
Total lease obligations
|
| | | $ | 15,616 | | |
| Morgan Stanley | | |
Piper Sandler
|
| |
SVB Leerink
|
|
| First Liberties Financial | | |
Raymond James
|
|
|
SEC registration fee
|
| | | $ | 18,122.85 | | |
|
FINRA filing fee
|
| | | $ | 29,825.00 | | |
|
Stock exchange listing fees
|
| | | $ | 25,000.00 | | |
|
Printing and engraving expenses
|
| | | $ | 85,000.00 | | |
|
Accounting fees and expenses
|
| | | $ | 230,850.00 | | |
|
Legal fees and expenses
|
| | | $ | 2,750,000.00 | | |
|
Transfer agent and registrar fees
|
| | | $ | 4,500.00 | | |
|
Miscellaneous fees and expenses
|
| | | $ | 6,702.15 | | |
|
TOTAL
|
| | | $ | 3,150,000.00 | | |
Exhibit
Number |
| |
Description of Exhibit
|
| |||
| | 1.1** | | | | Form of Underwriting Agreement | |
| | 3.1* | | | | | |
| | 3.2 | | | | | |
| | 3.3* | | | | | |
| | 3.4 | | | | | |
| | 4.1** | | | | Specimen Common Stock Certificate evidencing the shares of Common Stock | |
| | 5.1** | | | | Opinion of McDermott Will & Emery LLP | |
| | 10.1 | | | | | |
| | 10.2** | | | |
Fifth Amendment to Credit Agreement by and among the Registrant, EBS Enterprises LLC, the Guarantors party thereto, the Lenders party thereto and First Eagle Alternative Capital Agents, Inc. (formerly known as THL Corporate Finance), as Agent
|
|
| | 10.3* | | | | | |
| | 10.4* | | | | |
Exhibit
Number |
| |
Description of Exhibit
|
| |||
| | 10.5+ | | | | | |
| | 10.6+ | | | | | |
| | 10.7+ | | | | | |
| | 10.8+ | | | | | |
| | 10.9 | | | | | |
| | 10.10+ | | | | | |
| | 10.11 | | | | | |
| | 10.12+ | | | | | |
| | 21.1* | | | | | |
| | 23.1 | | | | | |
| | 23.2 | | | | | |
| | 23.3** | | | | Consent of McDermott Will & Emery LLP (included in Exhibit 5.1) | |
| | 24.1* | | | | | |
| | 99.1 | | | | | |
| | 99.2 | | | | | |
| | 99.3 | | | | | |
| | 99.4 | | | | |
|
Signature
|
| |
Title
|
|
|
/s/ Dr. Aaron Rollins
Dr. Aaron Rollins
|
| |
Chief Executive Officer, Director
(Principal Executive Officer) |
|
|
/s/ Dennis Dean
Dennis Dean
|
| |
Chief Financial Officer (Principal Accounting and Financial Officer)
|
|
|
/s/ Adam Feinstein
Adam Feinstein
|
| |
Non-Executive Chairman of the Board of Directors
|
|
|
/s/ Daniel Sollof
Daniel Sollof
|
| | Director | |
Exhibit 3.2
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
AIRSCULPT TECHNOLOGIES, INC.
AirSculpt Technologies, Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of Delaware (the “DGCL”), does hereby certify as follows:
1. The name of the Corporation is AirSculpt Technologies, Inc. The Corporation was incorporated under the name Airsculpt Technologies, Inc. by the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware on June 30, 2021 (the “Original Certificate”).
2. The Original Certificate was corrected by the filing of a Certificate of Correction with the Secretary of State of the State of Delaware on July 28, 2021 (the “Certificate of Correction” and, together with the Original Certificate, the “Existing Certificate”). The Certificate of Correction corrected the name of the Corporation to AirSculpt Technologies, Inc.
3. This Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate”), which amends and restates the Existing Certificate in its entirety, has been approved by the Board of Directors of the Corporation (the “Board of Directors”) in accordance with Sections 242 and 245 of the DGCL and has been adopted by the stockholders of the Corporation at a meeting of the stockholders of the Corporation in accordance with the provisions of Section 211 of the DGCL.
4. The text of the Existing Certificate is hereby amended and restated by this Amended and Restated Certificate to read in its entirety as set forth in EXHIBIT A attached hereto.
5. This Amended and Restated Certificate shall become effective on the date of filing with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, AirSculpt Technologies, Inc. has caused this Amended and Restated Certificate to be signed by a duly authorized officer of the Corporation, on , 2021.
AIRSCULPT TECHNOLOGIES, INC. | ||
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Name: | ||
Title: |
[Signature Page to Amended and Restated Certificate of Incorporation]
EXHIBIT A
ARTICLE I
NAME
The name of the corporation is AirSculpt Technologies, Inc. (the “Corporation”).
ARTICLE II
REGISTERED OFFICE AND AGENT
The address of the Corporation’s registered office in the State of Delaware is Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801, County of New Castle, and the name of its registered agent at such address is The Corporation Trust Company.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “DGCL”) as it now exists or may hereafter be amended and supplemented.
ARTICLE IV
CAPITAL STOCK
The Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares of capital stock which the Corporation shall have authority to issue is 500,000,000. The total number of shares of Common Stock that the Corporation is authorized to issue is 450,000,000, having a par value of $0.001 per share, and the total number of shares of Preferred Stock that the Corporation is authorized to issue is 50,000,000, having a par value of $0.001 per share.
The designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation are as follows:
A. COMMON STOCK.
1. General. The voting, dividend, liquidation, and other rights and powers of the Common Stock are subject to and qualified by the rights, powers and preferences of any series of Preferred Stock as may be designated by the Board of Directors of the Corporation (the “Board of Directors”) and outstanding from time to time.
2. Voting. Except as otherwise provided herein or expressly required by law, each holder of Common Stock, as such, shall be entitled to vote on each matter submitted to a vote of stockholders and shall be entitled to one (1) vote for each share of Common Stock held of record by such holder as of the record date for determining stockholders entitled to vote on such matter. Except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Amended and Restated Certificate (including any Certificate of Designation (as defined below)) that relates solely to the rights, powers, preferences (or the qualifications, limitations or restrictions thereof) or other terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Amended and Restated Certificate (including any Certificate of Designation) or pursuant to the DGCL.
Subject to the rights of any holders of any outstanding series of Preferred Stock, the number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the DGCL.
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3. Dividends. Subject to applicable law and the rights and preferences of any holders of any outstanding series of Preferred Stock, the holders of Common Stock, as such, shall be entitled to the payment of dividends on the Common Stock when, as and if declared by the Board of Directors in accordance with applicable law.
4. Liquidation. Subject to the rights and preferences of any holders of any shares of any outstanding series of Preferred Stock, in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the funds and assets of the Corporation that may be legally distributed to the Corporation’s stockholders shall be distributed among the holders of the then outstanding Common Stock pro rata in accordance with the number of shares of Common Stock held by each such holder.
B. PREFERRED STOCK
Shares of Preferred Stock may be issued from time to time in one or more series, each of such series to have such terms as stated or expressed herein and in the resolution or resolutions providing for the creation and issuance of such series adopted by the Board of Directors as hereinafter provided.
Authority is hereby expressly granted to the Board of Directors from time to time to issue the Preferred Stock in one or more series, and in connection with the creation of any such series, by adopting a resolution or resolutions providing for the issuance of the shares thereof and by filing a certificate of designation relating thereto in accordance with the DGCL (a “Certificate of Designation”), to determine and fix the number of shares of such series and such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including without limitation thereof, dividend rights, conversion rights, redemption privileges and liquidation preferences, and to increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any series as shall be stated and expressed in such resolutions, all to the fullest extent now or hereafter permitted by the DGCL. Without limiting the generality of the foregoing, the resolution or resolutions providing for the creation and issuance of any series of Preferred Stock may provide that such series shall be superior or rank equally or be junior to any other series of Preferred Stock to the extent permitted by law and this Amended and Restated Certificate (including any Certificate of Designation). Except as otherwise required by law, holders of any series of Preferred Stock shall be entitled only to such voting rights, if any, as shall expressly be granted thereto by this Amended and Restated Certificate (including any Certificate of Designation).
The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the DGCL.
ARTICLE V
BOARD OF DIRECTORS
For the management of the business and for the conduct of the affairs of the Corporation it is further provided that:
A. Subject to the special rights of the holders of one or more outstanding series of Preferred Stock to elect directors, the directors of the Corporation shall be classified with respect to the time for which they severally hold office into three classes, designated as Class I, Class II and Class III. The initial Class I directors shall serve for a term expiring at the first annual meeting of the stockholders following the date of this Amended and Restated Certificate; the initial Class II directors shall serve for a term expiring at the second annual meeting of the stockholders following the date of this Amended and Restated Certificate; and the initial Class III directors shall serve for a term expiring at the third annual meeting of the stockholders following the date of this Amended and Restated Certificate. At each annual meeting of the stockholders of the Corporation beginning with the first annual meeting of the stockholders following the date of this Amended and Restated Certificate, subject to the special rights of the holders of one or more outstanding series of Preferred Stock to elect directors, the successors of the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of the stockholders held in the third year following the year of their election. Each director shall hold office until his or her successor is duly elected and qualified or until his or her earlier death, resignation, disqualification or removal. No decrease in the number of directors shall shorten the term of any incumbent director. The Board of Directors is authorized to assign members of the Board of Directors already in office to Class I, Class II and Class III, subject to the terms of the Stockholders Agreement, dated on or about the date hereof, by and among the Corporation and the other signatories thereto (so long as such agreement remains in effect) (as the same may be amended, supplemented, restated or otherwise modified from time to time, the “Stockholders Agreement”).
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B. Except as otherwise expressly provided by the DGCL or this Amended and Restated Certificate, the business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. The number of directors which shall constitute the whole Board of Directors shall be fixed exclusively by one or more resolutions adopted from time to time by the Board of Directors, subject to the terms of the Stockholders Agreement.
C. Subject to the special rights of the holders of one or more outstanding series of Preferred Stock to elect directors and subject to the terms of the Stockholders Agreement, the Board of Directors or any individual director may be removed from office at any time but only for cause and only by the affirmative vote of the holders of at least two-thirds (66 and 2/3%) of the voting power of all of the then outstanding shares of voting stock of the Corporation entitled to vote at an election of directors.
D. Subject to the special rights of the holders of one or more outstanding series of Preferred Stock to elect directors and subject to the terms of the Stockholders Agreement, except as otherwise provided by law, any vacancies on the Board of Directors resulting from death, resignation, disqualification, retirement, removal or other causes and any newly created directorships resulting from any increase in the number of directors shall be filled exclusively by the affirmative vote of a majority of the directors then in office, even though less than a quorum, or by a sole remaining director (other than any directors elected by the separate vote of one or more outstanding series of Preferred Stock), and shall not be filled by the stockholders. Any director appointed in accordance with the preceding sentence shall hold office until the expiration of the term of the class to which such director shall have been appointed or until his or her earlier death, resignation, retirement, disqualification, or removal.
E. Whenever the holders of any one or more series of Preferred Stock issued by the Corporation shall have the right, voting separately as a series or separately as a class with one or more such other series, to elect directors at an annual or special meeting of stockholders, the election, term of office, removal and other features of such directorships shall be governed by the terms of this Amended and Restated Certificate (including any Certificate of Designation). Notwithstanding anything to the contrary in this Article V, the number of directors that may be elected by the holders of any such series of Preferred Stock shall be in addition to the number fixed pursuant to paragraph B of this Article V, and the total number of directors constituting the whole Board of Directors shall be automatically adjusted accordingly. Except as otherwise provided in the Certificate of Designation(s) in respect of one or more series of Preferred Stock, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such Certificate of Designation(s), the terms of office of all such additional directors elected by the holders of such series of Preferred Stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate (in which case each such director thereupon shall cease to be qualified as, and shall cease to be, a director) and the total authorized number of directors of the Corporation shall automatically be reduced accordingly.
F. In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend or repeal the Amended and Restated Bylaws of the Corporation (as amended and/or restated from time to time, the “Bylaws”). In addition to any vote of the holders of any class or series of stock of the Corporation required by applicable law or by this Amended and Restated Certificate (including any Certificate of Designation in respect of one or more series of Preferred Stock) or the Bylaws of the Corporation, the adoption, amendment or repeal of the Bylaws by the stockholders of the Corporation shall require the affirmative vote of the holders of at least two-thirds (66 and 2/3%) of the voting power of all of the then outstanding shares of voting stock of the Corporation entitled to vote generally in an election of directors.
G. The directors of the Corporation need not be elected by written ballot unless the Bylaws so provide.
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H. For so long as the VSCP Investor (as defined in the Stockholders Agreement) is entitled to designate at least one VSCP Designee (as defined in the Stockholders Agreement), a quorum for a meeting of the Board shall require the attendance in person, telephonically, or in any other manner permitted by applicable law, of at least one VSCP Designee. For so long as Rollins (as defined in the Stockholders Agreement) is entitled to designate a Rollins Designee (as defined in the Stockholders Agreement), a quorum for a meeting of the Board shall require the attendance in person, telephonically, or in any other manner permitted by applicable law, of the Rollins Designee.
ARTICLE VI
STOCKHOLDERS
A. Any action required or permitted to be taken by the stockholders of the Corporation must be effected at an annual or special meeting of the stockholders of the Corporation, and shall not be taken by written consent in lieu of a meeting. Notwithstanding the foregoing, any action required or permitted to be taken by the holders of any series of Preferred Stock, voting separately as a series or separately as a class with one or more other such series, may be taken without a meeting, without prior notice and without a vote, to the extent expressly so provided by the applicable Certificate of Designation relating to such series of Preferred Stock, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares of the relevant series of Preferred Stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation in accordance with the applicable provisions of the DGCL.
B. Subject to the special rights of the holders of one or more series of Preferred Stock, special meetings of the stockholders of the Corporation may be called, for any purpose or purposes, at any time only by or at the direction of the Board of Directors or the Chairperson of the Board of Directors, and shall not be called by any other person or persons.
C. Advance notice of stockholder nominations for the election of directors and of other business proposed to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws of the Corporation.
ARTICLE VII
LIABILITY
No director of the Corporation shall have any personal liability to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or hereafter may be amended. Any amendment, repeal or modification of this Article VII, or the adoption of any provision of the Amended and Restated Certificate inconsistent with this Article VII, shall not adversely affect any right or protection of a director of the Corporation with respect to any act or omission occurring prior to such amendment, repeal, modification or adoption. If the DGCL is amended after approval by the stockholders of this Article VII to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL as so amended.
ARTICLE VIII
INDEMNIFICATION
The Corporation shall have the power to provide rights to indemnification and advancement of expenses to its current and former officers, directors, employees and agents and to any person who is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.
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ARTICLE IX
COMPETITION AND CORPORATE OPPORTUNITIES
A. In recognition and anticipation that (i) certain directors, officers, principals, partners, members, managers, employees, agents and/or other representatives of the VSCP Entities (“VSCP Non-Employee Agents”) and their respective Affiliates and Affiliated Entities (each, as defined below) serve as directors of the Corporation and may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage and (ii) the VSCP Entities and their respective Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage, the provisions of this Article IX are set forth to regulate and define the conduct of certain affairs of the Corporation with respect to certain classes or categories of business opportunities as they may involve any of the VSCP Non-Employee Agents, the VSCP Entities or their respective Affiliates, and the powers, rights, duties and liabilities of the Corporation and its directors, officers and stockholders in connection therewith.
B. None of (i) any VSCP Non-Employee Agent or his or her Affiliates or Affiliated Entities or (ii) the VSCP Entities or any of their respective Affiliates (the Persons (as defined below) above being referred to, collectively, as “Identified Persons” and, individually, as an “Identified Person”) shall, to the fullest extent permitted by law, have any duty to refrain from directly or indirectly (1) engaging in the same or similar business activities or lines of business in which the Corporation or any of its Affiliates now engages or proposes to engage or (2) otherwise competing with the Corporation or any of its Affiliates, and, to the fullest extent permitted by law, no Identified Person shall be liable to the Corporation or its stockholders or to any Affiliate of the Corporation for breach of any fiduciary duty solely by reason of the fact that such Identified Person engages in any such activities. To the fullest extent permitted by law, the Corporation hereby renounces any interest or expectancy in, or right to be offered an opportunity to participate in, any business opportunity that may be a corporate opportunity for an Identified Person and the Corporation or any of its Affiliates, except as provided in paragraph C of this Article IX. Subject to said paragraph C of this Article IX, in the event that any Identified Person acquires knowledge of a potential transaction or other business opportunity that may be a corporate opportunity for itself, herself or himself and the Corporation or any of its Affiliates, such Identified Person shall, to the fullest extent permitted by law, have no duty to communicate or offer such transaction or other business opportunity to the Corporation or any of its Affiliates and, to the fullest extent permitted by law, shall not be liable to the Corporation or its stockholders or to any Affiliate of the Corporation for breach of any fiduciary duty as a stockholder or director of the Corporation solely by reason of the fact that such Identified Person pursues or acquires such corporate opportunity for itself, herself or himself, or offers or directs such corporate opportunity to another Person or does not communicate information regarding such corporate opportunity to the Corporation.
C. Notwithstanding the foregoing provision of this Article IX, the Corporation does not renounce its interest in any corporate opportunity offered to any VSCP Non-Employee Agent if such opportunity is expressly offered to such VSCP Non-Employee Agent solely in his or her capacity as a director, officer or agent of the Corporation, and the provisions of paragraph B of this Article IX shall not apply to any such corporate opportunity. In addition, notwithstanding anything to the contrary set forth herein, the provisions of this Article IX shall not release any Person who is or was an employee of the Corporation or any of its subsidiaries from any obligations or duties that such Person may have pursuant to any other agreement that such Person may have with the Corporation or any such subsidiary.
D. In addition to and notwithstanding the foregoing provisions of this Article IX, a potential corporate opportunity shall not be deemed to be a corporate opportunity for the Corporation if it is a business opportunity that (i) the Corporation is neither financially or legally able, nor contractually permitted, to undertake, (ii) from its nature, is not in the line of the Corporation’s business or is of no practical advantage to the Corporation or (iii) is one in which the Corporation has no interest or reasonable expectancy.
E. For purposes of this Article IX, (i) “Affiliate” shall mean (a) in respect of a VSCP Non-Employee Agent, any Person that, directly or indirectly, is controlled by such VSCP Non-Employee Agent (other than the Corporation and any entity that is controlled by the Corporation), (b) in respect of any of the VSCP Entities, a Person that, directly or indirectly, is controlled by any of the VSCP Entities, controls any of the VSCP Entities or is under common control with any of the VSCP Entities and shall include any principal, member, director, partner, stockholder, officer, employee or other representative of any of the foregoing (other than the Corporation and any entity that is controlled by the Corporation), and (c) in respect of the Corporation, any Person that, directly or indirectly, is controlled by the Corporation; (ii) “Affiliated Entity” shall mean (A) any Person of which a VSCP Non-Employee Agent serves as an officer, director, employee, agent or other representative (other than the Corporation and any entity that is controlled by the Corporation), (B) any direct or indirect partner, stockholder, member, manager or other representative of such Person or (C) any Affiliate of any of the foregoing; and (iii) “Person” shall mean any individual, corporation, general or limited partnership, limited liability company, joint venture, trust, association or any other entity.
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F. For the purposes of this Article IX, “control,” including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract, or otherwise. A person who is the owner of 20% or more of the outstanding voting stock of a corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting stock, in good faith and not for the purpose of circumventing the restrictions on business combinations set forth in Article X of this Amended and Restated Certificate, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity.
G. To the fullest extent permitted by law, any Person purchasing or otherwise acquiring any interest in any shares of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article IX.
ARTICLE X
DGCL SECTION 203 AND BUSINESS COMBINATIONS
A. The Corporation hereby expressly elects not to be governed by Section 203 of the DGCL.
B. Notwithstanding the foregoing, the Corporation shall not engage in any business combination (as defined below), at any point in time at which the Corporation’s Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act of 1934, as amended (the “Exchange Act”), with any interested stockholder (as defined below) for a period of three years following the time that such stockholder became an interested stockholder, unless:
1. prior to such time, the Board approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, or
2. upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock (as defined below) of the Corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned by (i) persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer, or
3. at or subsequent to such time, the business combination is approved by the Board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds (66 and 2/3%) of the voting power of all of the then outstanding shares of voting stock of the Corporation which is not owned by the interested stockholder.
C. For purposes of this Article X, references to:
1. “Affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another person.
2. “associate,” when used to indicate a relationship with any person, means: (i) any corporation, partnership, unincorporated association or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting stock; (ii) any trust or other estate in which such person has at least a 20% beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person.
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3. “business combination,” when used in reference to the Corporation and any interested stockholder of the Corporation, means:
a. any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation (a) with the interested stockholder, or (b) with any other corporation, partnership, unincorporated association or other entity if the merger or consolidation is caused by the interested stockholder and as a result of such merger or consolidation Section (B) of this Article X is not applicable to the surviving entity;
b. any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with the interested stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the Corporation;
c. any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of any stock of the Corporation or of such subsidiary to the interested stockholder, except: (a) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the interested stockholder became such; (b) pursuant to a merger under Section 251(g) of the DGCL; (c) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which security is distributed, pro rata to all holders of a class or series of stock of the Corporation subsequent to the time the interested stockholder became such; (d) pursuant to an exchange offer by the Corporation to purchase stock made on the same terms to all holders of said stock; or (e) any issuance or transfer of stock by the Corporation; provided, however, that in no case under items (c) through (e) of this subsection (iii) shall there be an increase in the interested stockholder’s proportionate share of the stock of any class or series of the Corporation or of the voting stock of the Corporation (except as a result of immaterial changes due to fractional share adjustments);
d. any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the Corporation or of any such subsidiary which is owned by the interested stockholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of stock not caused, directly or indirectly, by the interested stockholder; or
e. any receipt by the interested stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of the Corporation), of any loans, advances, guarantees, pledges, or other financial benefits (other than those expressly permitted in subsections (i) through (iv) above) provided by or through the Corporation or any direct or indirect majority-owned subsidiary.
4. “control,” including the terms “controlling,” “controlled by” and “under common control with,” shall have the meaning set forth in paragraph F in Article IX.
5. “interested stockholder” means any person (other than the Corporation or any direct or indirect majority-owned subsidiary of the Corporation) that (i) is the owner of 15% or more of the outstanding voting stock of the Corporation, or (ii) is an Affiliate or associate of the Corporation and was the owner of 15% or more of the outstanding voting stock of the Corporation at any time within the three year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder; and the Affiliates and associates of such person; but “interested stockholder” shall not include (a) VSCP, any Direct Transferee, any Indirect Transferee or any of their respective Affiliates or successors or any “group,” or any member of any such group, to which such persons are a party under Rule 13d-5 of the Exchange Act, (b) any person whose ownership of shares in excess of the 15% limitation set forth herein is the result of any action taken solely by the Corporation or (c) Rollins, any Direct Transferee, any Indirect Transferee or any of their respective Affiliates; provided, further, that in the case of clause (b) such person shall be an interested stockholder if thereafter such person acquires additional shares of voting stock of the Corporation, except as a result of further corporate action not caused, directly or indirectly, by such person. For the purpose of determining whether a person is an interested stockholder, the voting stock of the Corporation deemed to be outstanding shall include stock deemed to be owned by the person through application of the definition of “owner” below but shall not include any other unissued stock of the Corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.
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6. “owner,” including the terms “own” and “owned,” when used with respect to any stock, means a person that individually or with or through any of its Affiliates or associates:
a. beneficially owns such stock, directly or indirectly; or
b. has (a) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of stock tendered pursuant to a tender or exchange offer made by such person or any of such person’s Affiliates or associates until such tendered stock is accepted for purchase or exchange; or (b) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any stock because of such person’s right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more persons; or
c. has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (b) of subsection (ii) above), or disposing of such stock with any other person that beneficially owns, or whose Affiliates or associates beneficially own, directly or indirectly, such stock.
7. “person” means any individual, corporation, partnership, unincorporated association or other entity.
8. “stock” means, with respect to any corporation, capital stock and, with respect to any other entity, any equity interest.
9. “voting stock” means stock of any class or series entitled to vote generally in the election of directors and, with respect to any entity that is not a corporation, any equity interest entitled to vote generally in the election of the governing body of such entity. Every reference to a percentage of voting stock shall refer to such percentages of the votes of such voting stock.
10. “VSCP” means the VSCP Entities and their respective successors and assigns.
11. “Direct Transferee” means any person that acquires (other than in a registered public offering) directly from VSCP or any of their respective successors or any “group,” or any member of any such group, of which such persons are a party under Rule 13d-5 of the Exchange Act beneficial ownership of 15% or more of the then outstanding voting stock of the Corporation.
12. “VSCP Entities” means investment funds affiliated with Vesey Street Capital Partners, L.L.C., a Delaware limited liability company, and their respective Affiliates.
13. “Indirect Transferee” means any person that acquires (other than in a registered public offering) directly from any Direct Transferee or beneficial ownership of 15% or more of the then outstanding voting stock of the Corporation.
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ARTICLE XI
FORUM SELECTION
Unless the Corporation consents in writing to the selection of an alternative forum, (a) the Court of Chancery (the “Chancery Court”) of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action, suit or proceeding (“Proceeding”) brought on behalf of the Corporation, (ii) any Proceeding asserting a claim of breach of a fiduciary duty owed by any director, officer, other employee or stockholder of the Corporation to the Corporation or to the Corporation’s stockholders, (iii) any Proceeding arising out of or pursuant to any provision of the DGCL, this Amended and Restated Certificate or the Bylaws (in each case, as may be amended from time to time) or as to which the DGCL confers jurisdiction to the Court of Chancery of the State of Delaware, (iv) any Proceeding seeking to interpret, apply, enforce or determine the validity of this Amended and Restated Certificate or the Bylaws and (v) any Proceeding asserting a claim against the Corporation or any director, officer, other employee or stockholder of the Corporation governed by the internal affairs doctrine; and (b) subject to the preceding provisions of this Article XI, to the fullest extent permitted by applicable law, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause or causes of action arising under the Securities Act of 1933, as amended, including, without limitation, all causes of action asserted against any defendant to such complaint. If any Proceeding the subject matter of which is within the scope of clause (a) of the immediately preceding sentence is filed in a court other than the courts in the State of Delaware (a “Foreign Action”), such stockholder shall be deemed to have consented to (x) the personal jurisdiction of the state and federal courts in the State of Delaware in connection with any Proceeding brought in any such court to enforce the provisions of clause (a) of the immediately preceding sentence and (y) having service of process made upon such stockholder in any such Proceeding by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder. If any Proceeding the subject matter of which is within the scope of clause (b) of this Article XI is filed in a court other than the federal district courts of the United States of America (a “Foreign Securities Act Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the federal district courts of the United States of America in connection with any Proceeding brought in any such court to enforce clause (b) (a “Securities Act Enforcement Action”), and (ii) having service of process made upon such stockholder in any such Securities Act Enforcement Action by service upon such stockholder’s counsel in the Foreign Securities Act Action as agent for such stockholder.
For the avoidance of doubt, this Article XI is intended to benefit and may be enforced by the Corporation, its officers and directors, the underwriters to any offering giving rise to any Proceeding, and any other professional or entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering.
Any person or entity holding, owning, purchasing or otherwise acquiring any interest in any security of the Corporation shall be deemed to have notice of and consented to this Article XI.
If any provision or provisions of this Article XI shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever, (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article XI (including, without limitation, each portion of any paragraph of this Article XI containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.
ARTICLE XII
AMENDMENTS
A. Notwithstanding anything contained in this Amended and Restated Certificate to the contrary, in addition to any vote required by applicable law, the following provisions in this Amended and Restated Certificate may be amended, altered, repealed or rescinded, in whole or in part, or any provision inconsistent therewith or herewith may be adopted, only by the affirmative vote of the holders of at least two-thirds (66 and 2/3%) of the total voting power of all the then outstanding shares of stock of the Corporation entitled to vote thereon, voting together as a single class: Part B of Article IV, Article V, Article VI, Article VII, Article VIII, Article IX, Article X, Article XI and this Article XII.
B. If any provision or provisions of this Amended and Restated Certificate shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Amended and Restated Certificate (including, without limitation, each portion of any paragraph of this Amended and Restated Certificate containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not, to the fullest extent permitted by applicable law, in any way be affected or impaired thereby and (ii) to the fullest extent permitted by applicable law, the provisions of this Amended and Restated Certificate (including, without limitation, each such portion of any paragraph of this Amended and Restated Certificate containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.
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Exhibit 3.4
Amended and Restated Bylaws of
AirSculpt Technologies, Inc.
(a Delaware corporation)
Table of Contents
Page | ||
Article I - Corporate Offices | 1 | |
1.1 | Registered Office | 1 |
1.2 | Other Offices | 1 |
Article II - Meetings of Stockholders | 1 | |
2.1 | Place of Meetings | 1 |
2.2 | Annual Meeting | 1 |
2.3 | Special Meeting | 1 |
2.4 | Notice of Business to be Brought before a Meeting | 2 |
2.5 | Notice of Nominations for Election to the Board | 4 |
2.6 | Notice of Stockholders’ Meetings | 7 |
2.7 | Quorum | 7 |
2.8 | Adjourned Meeting; Notice | 7 |
2.9 | Conduct of Business | 8 |
2.10 | Voting | 8 |
2.11 | Record Date for Stockholder Meetings and Other Purposes | 8 |
2.12 | Proxies | 9 |
2.13 | List of Stockholders Entitled to Vote | 9 |
2.14 | Inspectors of Election | 9 |
2.15 | Delivery to the Corporation | 10 |
2.16 | Stockholder Action by Written Consent Without a Meeting | 10 |
Article III - Directors | 10 | |
3.1 | Powers | 10 |
3.2 | Number of Directors | 10 |
3.3 | Election, Qualification and Term of Office of Directors | 11 |
3.4 | Resignation and Vacancies | 11 |
3.5 | Place of Meetings; Meetings by Telephone | 11 |
3.6 | Regular Meetings | 11 |
3.7 | Special Meetings; Notice | 11 |
3.8 | Quorum | 12 |
3.9 | Board Action without a Meeting | 12 |
3.10 | Fees and Compensation of Directors | 12 |
3.11 | Removal of Directors | 12 |
Article IV - Committees | 12 | |
4.1 | Committees of Directors | 12 |
4.2 | Committee Minutes | 13 |
4.3 | Meetings and Actions of Committees | 13 |
4.4 | Subcommittees | 13 |
Article V - Officers | 13 | |
5.1 | Officers | 13 |
5.2 | Appointment of Officers | 14 |
5.3 | Subordinate Officers | 14 |
5.4 | Removal and Resignation of Officers | 14 |
5.5 | Vacancies in Offices | 14 |
5.6 | Representation of Shares of Other Corporations | 14 |
5.7 | Authority and Duties of Officers | 14 |
5.8 | Compensation | 14 |
Amended and Restated Bylaws of
AirSculpt Technologies, Inc.
ARTICLE I - Corporate Offices
1.1 Registered Office.
The address of the registered office of AirSculpt Technologies, Inc. (the “Corporation”) in the State of Delaware, and the name of its registered agent at such address, shall be as set forth in the Corporation’s certificate of incorporation, as the same may be amended and/or restated from time to time (the “Certificate of Incorporation”).
1.2 Other Offices.
The Corporation may have additional offices at any place or places, within or outside the State of Delaware, as the Corporation’s board of directors (the “Board”) may from time to time establish or as the business of the Corporation may require.
ARTICLE II - Meetings of Stockholders
2.1 Place of Meetings.
Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the Board. The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a) of the General Corporation Law of the State of Delaware (the “DGCL”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the Corporation’s principal executive office.
2.2 Annual Meeting.
The Board shall designate the date and time of the annual meeting. At the annual meeting, directors shall be elected and other proper business properly brought before the meeting in accordance with Section 2.4 may be transacted. The Board may postpone, reschedule or cancel any previously scheduled annual meeting of stockholders.
2.3 Special Meeting.
Special meetings of the stockholders may be called only by such persons and only in such manner as set forth in the Certificate of Incorporation.
No business may be transacted at any special meeting of stockholders other than the business specified in the notice of such meeting. The Board may postpone, reschedule or cancel any previously scheduled special meeting of stockholders.
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2.4 Notice of Business to be Brought before a Meeting.
(a) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) specified in a notice of meeting given by or at the direction of the Board, (ii) if not specified in a notice of meeting, otherwise brought before the meeting by the Board or the Chairperson of the Board or (iii) otherwise properly brought before the meeting by a stockholder present in person who (A) (1) was a record owner of shares of the Corporation both at the time of giving the notice provided for in this Section 2.4 and at the time of the meeting, (2) is entitled to vote at the meeting and (3) has complied with this Section 2.4 in all applicable respects or (B) properly made such proposal in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”). The foregoing clause (iii) shall be the exclusive means for a stockholder to propose business to be brought before an annual meeting of the stockholders. The only matters that may be brought before a special meeting are the matters specified in the notice of meeting given by or at the direction of the person calling the meeting pursuant to Section 2.3, and stockholders shall not be permitted to propose business to be brought before a special meeting of the stockholders. For purposes of this Section 2.4, “present in person” shall mean that the stockholder proposing that the business be brought before the annual meeting of the Corporation, or a qualified representative of such proposing stockholder, appear at such annual meeting in person, or by remote communication, if applicable. A “qualified representative” of such proposing stockholder shall be a duly authorized officer, manager or partner of such stockholder or any other person authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders. Stockholders seeking to nominate persons for election to the Board must comply with Section 2.5, and this Section 2.4 shall not be applicable to nominations except as expressly provided in Section 2.5.
(b) Without qualification, for business to be properly brought before an annual meeting by a stockholder, the stockholder must (i) provide Timely Notice (as defined below) thereof in writing and in proper form to the Secretary of the Corporation and (ii) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.4. To be timely, a stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the one-year anniversary of the preceding year’s annual meeting; provided, however, that if no annual meeting was held in the preceding year, to be timely, a stockholder’s notice must be so delivered, or mailed and received, not earlier than the close of business on the one hundred and twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or, if later, the tenth (10th) day following the day on which public disclosure of the date of such annual meeting was first made by the Corporation; provided, further, that if the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, to be timely, a stockholder’s notice must be so delivered, or mailed and received, not later than the ninetieth (90th) day prior to such annual meeting or, if later, the tenth (10th) day following the day on which public disclosure of the date of such annual meeting was first made by the Corporation (such notice within such time periods, “Timely Notice”). In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of Timely Notice as described above.
(c) To be in proper form for purposes of this Section 2.4, a stockholder’s notice to the Secretary of the Corporation shall set forth:
(i) As to each Proposing Person (as defined below), (A) the name and address of such Proposing Person (including, if applicable, the name and address that appear on the Corporation’s books and records); and (B) the class or series and number of shares of the Corporation that are, directly or indirectly, owned of record or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by such Proposing Person, except that such Proposing Person shall in all events be deemed to beneficially own any shares of any class or series of the Corporation as to which such Proposing Person has a right to acquire beneficial ownership at any time in the future (the disclosures to be made pursuant to the foregoing clauses (A) and (B) are referred to as “Stockholder Information”);
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(ii) As to each Proposing Person, (A) the full notional amount of any securities that, directly or indirectly, underlie any “derivative security” (as such term is defined in Rule 16a-1(c) under the Exchange Act) that constitutes a “call equivalent position” (as such term is defined in Rule 16a-1(b) under the Exchange Act) (“Synthetic Equity Position”) and that is, directly or indirectly, held or maintained by such Proposing Person with respect to any shares of any class or series of shares of the Corporation; provided that, for the purposes of the definition of “Synthetic Equity Position,” the term “derivative security” shall also include any security or instrument that would not otherwise constitute a “derivative security” as a result of any feature that would make any conversion, exercise or similar right or privilege of such security or instrument becoming determinable only at some future date or upon the happening of a future occurrence, in which case the determination of the amount of securities into which such security or instrument would be convertible or exercisable shall be made assuming that such security or instrument is immediately convertible or exercisable at the time of such determination; and, provided, further, that any Proposing Person satisfying the requirements of Rule 13d-1(b)(1) under the Exchange Act (other than a Proposing Person that so satisfies Rule 13d-1(b)(1) under the Exchange Act solely by reason of Rule 13d-1(b)(1)(ii)(E)) shall not be deemed to hold or maintain the notional amount of any securities that underlie a Synthetic Equity Position held by such Proposing Person as a hedge with respect to a bona fide derivatives trade or position of such Proposing Person arising in the ordinary course of such Proposing Person’s business as a derivatives dealer, (B) any rights to dividends on the shares of any class or series of shares of the Corporation owned beneficially by such Proposing Person that are separated or separable from the underlying shares of the Corporation, (C) any material pending or threatened legal proceeding in which such Proposing Person is a party or material participant involving the Corporation or any of its officers or directors, or any affiliate of the Corporation, (D) any other material relationship between such Proposing Person, on the one hand, and the Corporation or any affiliate of the Corporation, on the other hand, (E) any direct or indirect material interest in any material contract or agreement of such Proposing Person with the Corporation or any affiliate of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), (F) a representation that such Proposing Person intends or is part of a group that intends to deliver a proxy statement or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or otherwise solicit proxies from stockholders in support of such proposal and (G) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act (the disclosures to be made pursuant to the foregoing clauses (A) through (G) are referred to as “Disclosable Interests”); provided, however, that Disclosable Interests shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner; and
(iii) As to each item of business that the stockholder proposes to bring before the annual meeting, (A) a brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each Proposing Person, (B) the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the bylaws, the language of the proposed amendment), (C) a reasonably detailed description of all agreements, arrangements and understandings (x) between or among any of the Proposing Persons or (y) between or among any Proposing Person and any other person or entity (including their names) in connection with the proposal of such business by such stockholder, and (D) any other information relating to such item of business that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act; provided, however, that the disclosures required by this Section 2.4(c)(iii) shall not include any disclosures with respect to any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner.
For purposes of this Section 2.4, the term “Proposing Person” shall mean (i) the stockholder providing the notice of business proposed to be brought before an annual meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the business proposed to be brought before the annual meeting is made, and (iii) any participant (as defined in paragraphs (a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A) with such stockholder in such solicitation.
(d) A Proposing Person shall update and supplement its notice to the Corporation of its intent to propose business at an annual meeting, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.4 shall be true and correct as of the record date for stockholders entitled to vote at the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary of the Corporation at the principal executive offices of the Corporation not later than five (5) business days after the record date for stockholders entitled to vote at the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any proposal or to submit any new proposal, including by changing or adding matters, business or resolutions proposed to be brought before a meeting of the stockholders.
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(e) Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at an annual meeting that is not properly brought before the meeting in accordance with this Section 2.4. The presiding officer of the meeting shall, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with this Section 2.4, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.
(f) This Section 2.4 is expressly intended to apply to any business proposed to be brought before an annual meeting of stockholders other than any proposal made in accordance with Rule 14a-8 under the Exchange Act and included in the Corporation’s proxy statement. In addition to the requirements of this Section 2.4 with respect to any business proposed to be brought before an annual meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such business. Nothing in this Section 2.4 shall be deemed to affect the rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
(g) For purposes of these bylaws, “public disclosure” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.
2.5 Notice of Nominations for Election to the Board.
(a) Nominations of any person for election to the Board at an annual meeting or at a special meeting (but only if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting) may be made at such meeting only (i) by or at the direction of the Board, including by any committee or persons authorized to do so by the Board or these bylaws, or (ii) by a stockholder present in person (A) who was a record owner of shares of the Corporation both at the time of giving the notice provided for in this Section 2.5 and at the time of the meeting, (B) is entitled to vote at the meeting, and (C) has complied with this Section 2.5 as to such notice and nomination. For purposes of this Section 2.5, “present in person” shall mean that the stockholder proposing that the business be brought before the meeting of the Corporation, or a qualified representative of such stockholder, appear at such meeting in person, or by remote communication, if applicable. A “qualified representative” of such proposing stockholder shall be a duly authorized officer, manager or partner of such stockholder or any other person authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders. The foregoing clause (iii) shall be the exclusive means for a stockholder to make any nomination of a person or persons for election to the Board at an annual meeting or special meeting.
(b) (i) For a stockholder to make any nomination of a person or persons for election to the Board at an annual meeting, the stockholder must (1) provide Timely Notice (as defined in Section 2.4) thereof in writing and in proper form to the Secretary of the Corporation, (2) provide the information, agreements and questionnaires with respect to such stockholder and its candidate for nomination as required to be set forth by this Section 2.5 and (3) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5.
(ii) If the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling a special meeting, then for a stockholder to make any nomination of a person or persons for election to the Board at a special meeting, the stockholder must (i) provide Timely Notice thereof in writing and in proper form to the Secretary of the Corporation at the principal executive offices of the Corporation, (ii) provide the information with respect to such stockholder and its candidate for nomination as required by this Section 2.5 and (iii) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5. To be timely, a stockholder’s notice for nominations to be made at a special meeting must be delivered to, or mailed and received at, the principal executive offices of the Corporation not earlier than the one hundred twentieth (120th) day prior to such special meeting and not later than the ninetieth (90th) day prior to such special meeting or, if later, the tenth (10th) day following the day on which public disclosure (as defined in Section 2.4) of the date of such special meeting was first made.
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(iii) In no event shall any adjournment or postponement of an annual meeting or special meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above.
(iv) In no event may a Nominating Person provide Timely Notice with respect to a greater number of director candidates than are subject to election by stockholders at the applicable meeting. If the Corporation shall, subsequent to such notice, increase the number of directors subject to election at the meeting, such notice as to any additional nominees shall be due on the later of (i) the conclusion of the time period for Timely Notice, (ii) the date set forth in Section 2.5(b)(ii) or (iii) the tenth day following the date of public disclosure (as defined in Section 2.4) of such increase.
(c) To be in proper form for purposes of this Section 2.5, a stockholder’s notice to the Secretary of the Corporation shall set forth:
(i) As to each Nominating Person (as defined below), the Stockholder Information (as defined in Section 2.4(c)(i), except that for purposes of this Section 2.5, the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(c)(i));
(ii) As to each Nominating Person, any Disclosable Interests (as defined in Section 2.4(c)(ii), except that for purposes of this Section 2.5, the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(c)(ii) and the disclosure with respect to the business to be brought before the meeting in Section 2.4(c)(ii) shall be made with respect to the election of directors at the meeting); and
(iii) As to each candidate whom a Nominating Person proposes to nominate for election as a director, (A) all information with respect to such candidate for nomination that would be required to be set forth in a stockholder’s notice pursuant to this Section 2.5 if such candidate for nomination were a Nominating Person, (B) all information relating to such candidate for nomination that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14(a) under the Exchange Act (including such candidate’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), (C) a description of any direct or indirect material interest in any material contract or agreement between or among any Nominating Person, on the one hand, and each candidate for nomination or his or her respective associates or any other participants in such solicitation, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such Nominating Person were the “registrant” for purposes of such rule and the candidate for nomination were a director or executive officer of such registrant and (D) a completed and signed questionnaire, representation and agreement as provided in Section 2.5(f).
For purposes of this Section 2.5, the term “Nominating Person” shall mean (i) the stockholder providing the notice of the nomination proposed to be made at the meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be made at the meeting is made, and (iii) any other participant in such solicitation.
(d) A stockholder providing notice of any nomination proposed to be made at a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.5 shall be true and correct as of the record date for stockholders entitled to vote at the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary of the Corporation at the principal executive offices of the Corporation not later than five (5) business days after the record date for stockholders entitled to vote at the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any nomination or to submit any new nomination.
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(e) In addition to the requirements of this Section 2.5 with respect to any nomination proposed to be made at a meeting, each Nominating Person shall comply with all applicable requirements of the Exchange Act with respect to any such nominations.
(f) To be eligible to be a candidate for election as a director of the Corporation at an annual or special meeting, a candidate must be nominated in the manner prescribed in Section 2.5 and the candidate for nomination, whether nominated by the Board or by a stockholder of record, must have previously delivered (in accordance with the time period prescribed for delivery in a notice to such candidate given by or on behalf of the Board), to the Secretary of the Corporation at the principal executive offices of the Corporation, (i) a completed written questionnaire (in a form provided by the Corporation) with respect to the background, qualifications, stock ownership and independence of such proposed nominee and (ii) a written representation and agreement (in form provided by the Corporation) that such candidate for nomination (A) is not and, if elected as a director during his or her term of office, will not become a party to (1) any agreement, arrangement or understanding with, and has not given and will not give any commitment or assurance to, any person or entity as to how such proposed nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) or (2) any Voting Commitment that could limit or interfere with such proposed nominee’s ability to comply, if elected as a director of the Corporation, with such proposed nominee’s fiduciary duties under applicable law, (B) is not, and will not become a party to, any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation or reimbursement for service as a director that has not been disclosed to the Corporation and (C) if elected as a director of the Corporation, will comply with all applicable corporate governance, conflict of interest, confidentiality, stock ownership and trading and other policies and guidelines of the Corporation applicable to directors and in effect during such person’s term in office as a director (and, if requested by any candidate for nomination, the Secretary of the Corporation shall provide to such candidate for nomination all such policies and guidelines then in effect).
(g) The Board may also require any proposed candidate for nomination as a Director to furnish such other information as may reasonably be requested by the Board in writing prior to the meeting of stockholders at which such candidate’s nomination is to be acted upon in order for the Board to determine the eligibility of such candidate for nomination to be an independent director of the Corporation in accordance with the Corporation’s corporate governance guidelines.
(h) A candidate for nomination as a director shall further update and supplement the materials delivered pursuant to this Section 2.5, if necessary, so that the information provided or required to be provided pursuant to this Section 2.5 shall be true and correct as of the record date for stockholders entitled to vote at the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary of the Corporation at the principal executive offices of the Corporation (or any other office specified by the Corporation in any public announcement) not later than five (5) business days after the record date for stockholders entitled to vote at the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any materials delivered pursuant to this Section 2.5 by a candidate for director , extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any proposal or to submit any new proposal, including by changing or adding nominees, matters, business or resolutions proposed to amend or update any nomination or to submit any new nomination.
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(i) No candidate shall be eligible for nomination as a director of the Corporation unless such candidate for nomination and the Nominating Person seeking to place such candidate’s name in nomination has complied with this Section 2.5. The presiding officer at the meeting shall, if the facts warrant, determine that a nomination was not properly made in accordance with Section 2.5, and if he or she should so determine, he or she shall so declare such determination to the meeting, the defective nomination shall be disregarded and any ballots cast for the candidate in question (but in the case of any form of ballot listing other qualified nominees, only the votes cast for the nominee in question) shall be void and of no force or effect.
(j) Notwithstanding anything in these bylaws to the contrary, no candidate for nomination shall be eligible to be seated as a director of the Corporation unless nominated and elected in accordance with Section 2.5.
(k) Notwithstanding the foregoing, the nomination of any VSCP Designee or Rollins Designee (each as defined in the Stockholders Agreement, dated as of [•], 2021, by and among the Corporation and the other signatories thereto (so long as such agreement remains in effect) (as the same may be amended, supplemented, restated or otherwise modified from time to time, the “Stockholders Agreement”)) shall not be subject to the provisions of this Section 2.5.
2.6 Notice of Stockholders’ Meetings.
Unless otherwise provided by law, the Certificate of Incorporation or these bylaws, the notice of any meeting of stockholders shall be sent or otherwise given in accordance with Section 8.1 not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, if any, date and time of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.
2.7 Quorum.
Unless otherwise provided by law, the Certificate of Incorporation or these bylaws, the holders of a majority in voting power of the stock issued and outstanding and entitled to vote, present in person, or by remote communication, if applicable, or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. A quorum, once established at a meeting, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, a quorum is not present or represented at any meeting of the stockholders, then either (i) the person presiding over the meeting or (ii) a majority in voting power of the stockholders entitled to vote at the meeting, present in person, or by remote communication, if applicable, or represented by proxy, shall have power to recess the meeting or adjourn the meeting from time to time in the manner provided in Section 2.8 until a quorum is present or represented. At any recessed or adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.
2.8 Adjourned Meeting; Notice.
When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At any adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix as the record date for determining stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote at the adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such meeting as of the record date so fixed for notice of such adjourned meeting.
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2.9 Conduct of Business.
The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Board may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. At every meeting of the stockholders, the Chairperson of the Board, or in his or her absence or inability to act, the Chief Executive Officer, or in his or her absence or inability to act, the officer or director whom the Board shall appoint, shall act as chairperson of, and preside at the meeting. Except to the extent inconsistent with such rules and regulations as adopted by the Board, the person presiding over any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures (which need not be in writing) and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the person presiding over the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present (including, without limitation, rules and procedures for removal of disruptive persons from the meeting); (iii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the person presiding over the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting (including, without limitation, determinations with respect to the administration and/or interpretation of any of the rules, regulations or procedures of the meeting, whether adopted by the Board or prescribed by the person presiding over the meeting), shall, if the facts warrant, determine and declare to the meeting that a matter of business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
2.10 Voting.
Except as may be otherwise provided in the Certificate of Incorporation, these bylaws or the DGCL, each stockholder shall be entitled to one (1) vote for each share of capital stock held by such stockholder.
Except as otherwise provided by the Certificate of Incorporation, at all duly called or convened meetings of stockholders at which a quorum is present, for the election of directors, a plurality of the votes cast shall be sufficient to elect a director. Except as otherwise provided by the Certificate of Incorporation, these bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or applicable law or pursuant to any regulation applicable to the Corporation or its securities, each other matter presented to the stockholders at a duly called or convened meeting at which a quorum is present shall be decided by the affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes) on such matter.
2.11 Record Date for Stockholder Meetings and Other Purposes.
In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall, unless otherwise required by law, not be more than sixty (60) days nor less than ten (10) days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the next day preceding the day on which notice is first given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting; and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.
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In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment or any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of capital stock, or for the purposes of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.
2.12 Proxies.
Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. A proxy may be in the form of an electronic transmission which sets forth or is submitted with information from which it can be determined that the transmission was authorized by the stockholder.
2.13 List of Stockholders Entitled to Vote.
The Corporation shall prepare, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, that if the record date for determining the stockholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth (10th) day before the meeting date), arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The Corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least ten (10) days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the Corporation’s principal executive office. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 2.13 or to vote in person or by proxy at any meeting of stockholders.
2.14 Inspectors of Election.
Before any meeting of stockholders, the Corporation shall appoint an inspector or inspectors of election to act at the meeting or its adjournment and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If any person appointed as inspector or any alternate fails to appear or fails or refuses to act, then the person presiding over the meeting shall appoint a person to fill that vacancy.
Such inspectors shall:
(i) determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting and the validity of any proxies and ballots;
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(ii) count all votes or ballots;
(iii) count and tabulate all votes;
(iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspector(s); and
(v) certify its or their determination of the number of shares represented at the meeting and its or their count of all votes and ballots.
Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspection with strict impartiality and according to the best of such inspector’s ability. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein. The inspectors of election may appoint such persons to assist them in performing their duties as they determine.
2.15 Delivery to the Corporation.
Whenever this ARTICLE II requires one or more persons (including a record or beneficial owner of stock) to deliver a document or information to the Corporation or any officer, employee or agent thereof (including any notice, request, questionnaire, revocation, representation or other document or agreement), such document or information shall be in writing exclusively (and not in an electronic transmission) and shall be delivered exclusively by hand (including, without limitation, overnight courier service) or by certified or registered mail, return receipt requested, and the Corporation shall not be required to accept delivery of any document not in such written form or so delivered. For the avoidance of doubt, the Corporation expressly opts out of Section 116 of the DGCL with respect to the delivery of information and documents to the Corporation required by this ARTICLE II.
2.16 Stockholder Action by Written Consent Without a Meeting.
Any action required or permitted to be taken by the stockholders of the Corporation must be effected at an annual or special meeting of stockholders of the Corporation, and may not be taken by written consent in lieu of a meeting. Notwithstanding the foregoing, any action required or permitted to be taken by the holders of any series of preferred stock of the Corporation, voting separately as a series or separately as a class with one or more other such series, may be taken without a meeting, without prior notice and without a vote, to the extent expressly so provided by the applicable certificate of designation relating to such series of preferred stock of the Corporation, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares of the relevant series of preferred stock of the Corporation having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation in accordance with the applicable provisions of the DGCL.
ARTICLE III - Directors
3.1 Powers.
Except as otherwise provided by the Certificate of Incorporation or the DGCL, the business and affairs of the Corporation shall be managed by or under the direction of the Board.
3.2 Number of Directors.
Subject to the Certificate of Incorporation and the Stockholders Agreement, the total number of directors constituting the Board shall be determined from time to time by resolution of the Board. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.
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3.3 Election, Qualification and Term of Office of Directors.
Except as provided in Section 3.4, and subject to the Certificate of Incorporation, each director, including a director elected to fill a vacancy or newly created directorship, shall hold office until the expiration of the term of the class, if any, for which elected and until such director’s successor is elected and qualified or until such director’s earlier death, resignation, disqualification or removal. Directors need not be stockholders. The Certificate of Incorporation or these bylaws may prescribe qualifications for directors.
3.4 Resignation and Vacancies.
Any director may resign at any time upon notice given in writing or by electronic transmission to the Corporation. The resignation shall take effect at the time specified therein or upon the happening of an event specified therein, and if no time or event is specified, at the time of its receipt. When one or more directors so resigns and the resignation is effective at a future date or upon the happening of an event to occur on a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in Section 3.3.
Unless otherwise provided in the Certificate of Incorporation, the Stockholders Agreement or these bylaws, vacancies resulting from the death, resignation, disqualification or removal of any director, and newly created directorships resulting from any increase in the authorized number of directors shall be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director’s successor shall have been elected and qualified.
3.5 Place of Meetings; Meetings by Telephone.
The Board may hold meetings, both regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the Certificate of Incorporation or these bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting pursuant to this bylaw shall constitute presence in person at the meeting.
3.6 Regular Meetings.
Regular meetings of the Board may be held within or outside the State of Delaware and at such time and at such place as which has been designated by the Board and publicized among all directors, either orally or in writing, by telephone, including a voice-messaging system or other system designed to record and communicate messages, facsimile, telegraph or telex, or by electronic mail or other means of electronic transmission. No further notice shall be required for regular meetings of the Board.
3.7 Special Meetings; Notice.
Special meetings of the Board for any purpose or purposes may be called at any time by the Chairperson of the Board, the Chief Executive Officer or the Secretary of the Corporation or a majority of the total number of directors constituting the Board.
Notice of the time and place of special meetings shall be:
(i) delivered personally by hand, by courier or by telephone;
(ii) sent by United States first-class mail, postage prepaid;
(iii) sent by facsimile or electronic mail; or
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(iv) sent by other means of electronic transmission,
directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, or other address for electronic transmission, as the case may be, as shown on the Corporation’s records.
If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or electronic mail, or (iii) sent by other means of electronic transmission, it shall be delivered or sent at least twenty-four (24) hours before the time of the holding of the meeting. If the notice is sent by U.S. mail, it shall be deposited in the U.S. mail at least four (4) days before the time of the holding of the meeting. The notice need not specify the place of the meeting (if the meeting is to be held at the Corporation’s principal executive office) nor the purpose of the meeting.
3.8 Quorum.
At all meetings of the Board, unless otherwise provided by the Certificate of Incorporation, a majority of the total number of directors shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the Certificate of Incorporation or these bylaws. If a quorum is not present at any meeting of the Board, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.
3.9 Board Action without a Meeting.
Unless otherwise restricted by the Certificate of Incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission. After an action is taken, the consent or consents relating thereto shall be filed with the minutes of the proceedings of the Board, or the committee thereof, in the same paper or electronic form as the minutes are maintained. Such action by written consent or consent by electronic transmission shall have the same force and effect as a unanimous vote of the Board.
3.10 Fees and Compensation of Directors.
Unless otherwise restricted by the Certificate of Incorporation, the Stockholders Agreement or these bylaws, the Board shall have the authority to fix the compensation, including fees and reimbursement of expenses, of directors for services to the Corporation in any capacity.
3.11 Removal of Directors.
Subject to the special rights of the holders of one or more outstanding series of preferred stock of the Corporation to elect directors, the Board or any individual director may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least two-thirds (66 and 2/3%) of the voting power of all the then outstanding shares of voting stock of the Corporation entitled to vote at an election of directors.
ARTICLE IV - Committees
4.1 Committees of Directors.
The Board may designate one (1) or more committees, each committee to consist of one (1) or more of the directors of the Corporation. The Board may designate one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the Corporation. All provisions of this Section 4.1 are subject to any rights granted pursuant to the Stockholders Agreement.
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4.2 Committee Minutes.
Each committee shall keep regular minutes of its meetings and report the same to the Board when required.
4.3 Meetings and Actions of Committees.
Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:
(i) Section 3.5 (Place of Meetings; Meetings by Telephone);
(ii) Section 3.6 (Regular Meetings);
(iii) Section 3.7 (Special Meetings; Notice);
(iv) Section 3.9 (Board Action Without a Meeting); and
(v) Section 7.13 (Waiver of Notice),
with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board and its members; provided, however, that:
(i) the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee;
(ii) special meetings of committees may also be called by resolution of the Board or the chairperson of the applicable committee; and
(iii) the Board may adopt rules for the governance of any committee to override the provisions that would otherwise apply to the committee pursuant to this Section 4.3, provided that such rules do not violate the provisions of the Certificate of Incorporation or applicable law.
4.4 Subcommittees.
Unless otherwise provided in the Certificate of Incorporation, these bylaws or the resolutions of the Board designating the committee, a committee may create one (1) or more subcommittees, each subcommittee to consist of one (1) or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee.
ARTICLE V - Officers
5.1 Officers.
The officers of the Corporation shall include a Chief Executive Officer and a Secretary. The Corporation may also have, at the discretion of the Board, a Chairperson of the Board, a Vice Chairperson of the Board, a President, a Chief Financial Officer, a Treasurer, one (1) or more Vice Presidents, one (1) or more Assistant Vice Presidents, one (1) or more Assistant Treasurers, one (1) or more Assistant Secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person. No officer need be a stockholder or director of the Corporation.
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5.2 Appointment of Officers.
The Board shall appoint the officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3.
5.3 Subordinate Officers.
The Board may appoint, or empower the Chief Executive Officer to appoint, such other officers and agents as the business of the Corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board may from time to time determine.
5.4 Removal and Resignation of Officers.
Subject to the rights, if any, of an officer under any contract of employment any officer may be removed, either with or without cause, by the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.
Any officer may resign at any time by giving written notice to the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.
5.5 Vacancies in Offices.
Any vacancy occurring in any office of the Corporation shall be filled by the Board or as provided in Section 5.2.
5.6 Representation of Shares of Other Corporations.
The Chairperson of the Board or the Chief Executive Officer of this Corporation, or any other person authorized by the Board or the Chief Executive Officer, is authorized to vote, represent and exercise on behalf of this Corporation all rights incident to any and all shares or voting securities of any other corporation or other person standing in the name of this Corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.
5.7 Authority and Duties of Officers.
All officers of the Corporation shall respectively have such authority and perform such duties in the management of the business of the Corporation as may be provided herein or designated from time to time by the Board and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.
5.8 Compensation.
The compensation of the officers of the Corporation for their services as such shall be fixed from time to time by or at the direction of the Board. An officer of the Corporation shall not be prevented from receiving compensation by reason of the fact that he or she is also a director of the Corporation.
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ARTICLE VI - Records
A stock ledger consisting of one or more records in which the names of all of the Corporation’s stockholders of record, the address and number of shares registered in the name of each such stockholder, and all issuances and transfers of stock of the corporation are recorded in accordance with Section 224 of the DGCL shall be administered by or on behalf of the Corporation. Any records administered by or on behalf of the Corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or by means of, or be in the form of, any information storage device, or method, or one or more electronic networks or databases (including one or more distributed electronic networks or databases), provided that the records so kept can be converted into clearly legible paper form within a reasonable time and, with respect to the stock ledger, that the records so kept (i) can be used to prepare the list of stockholders specified in Sections 219 and 220 of the DGCL, (ii) record the information specified in Sections 156, 159, 217(a) and 218 of the DGCL, and (iii) record transfers of stock as governed by Article 8 of the Uniform Commercial Code as adopted in the State of Delaware.
ARTICLE VII - General Matters
7.1 Execution of Corporate Contracts and Instruments.
The Board, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances.
7.2 Stock Certificates.
The shares of the Corporation shall be represented by certificates or shall be uncertificated. Certificates for the shares of stock, if any, shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock represented by a certificate shall be entitled to have a certificate signed by, or in the name of the Corporation by, any two officers authorized to sign stock certificates representing the number of shares registered in certificate form. The Chairperson or Vice Chairperson of the Board, the Chief Executive Officer, the President, if any, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Corporation shall be specifically authorized to sign stock certificates. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.
The Corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, or upon the books and records of the Corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the Corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.
7.3 Special Designation of Certificates.
If the Corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or on the back of the certificate that the Corporation shall issue to represent such class or series of stock (or, in the case of uncertificated shares, set forth in a notice provided pursuant to Section 151 of the DGCL); provided, however, that except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements, there may be set forth on the face of back of the certificate that the Corporation shall issue to represent such class or series of stock (or, in the case of any uncertificated shares, included in the aforementioned notice) a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
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7.4 Lost Certificates.
Except as provided in this Section 7.4, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and cancelled at the same time. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
7.5 Shares Without Certificates
The Corporation may adopt a system of issuance, recordation and transfer of its shares of stock by electronic or other means not involving the issuance of certificates, provided the use of such system by the Corporation is permitted in accordance with applicable law.
7.6 Construction; Definitions.
Unless the context requires otherwise, the general provisions, rules of construction and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural and the plural number includes the singular.
7.7 Dividends.
The Board, subject to any restrictions contained in either (i) the DGCL or (ii) the Certificate of Incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock.
The Board may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting contingencies.
7.8 Fiscal Year.
The fiscal year of the Corporation shall be fixed by resolution of the Board and may be changed by the Board.
7.9 Seal.
The Corporation may adopt a corporate seal, which shall be adopted and which may be altered by the Board. The Corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.
7.10 Transfer of Stock.
Shares of the stock of the Corporation shall be transferable in the manner prescribed by law and in these bylaws. Shares of stock of the Corporation shall be transferred on the books of the Corporation only by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the Corporation of the certificate or certificates representing such shares endorsed by the appropriate person or persons (or by delivery of duly executed instructions with respect to uncertificated shares), with such evidence of the authenticity of such endorsement or execution, transfer, authorization and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing the names of the persons from and to whom it was transferred.
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7.11 Stock Transfer Agreements.
The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes or series of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.
7.12 Registered Stockholders.
The Corporation:
(i) shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner; and
(ii) shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware.
7.13 Waiver of Notice.
Whenever notice is required to be given under any provision of the DGCL, the Certificate of Incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the Certificate of Incorporation or these bylaws.
ARTICLE VIII - Notice
8.1 Delivery of Notice; Notice by Electronic Transmission.
Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under any provisions of the DGCL, the Certificate of Incorporation, or these bylaws may be given in writing directed to the stockholder’s mailing address (or by electronic transmission directed to the stockholder’s electronic mail address, as applicable) as it appears on the records of the Corporation and shall be given (1) if mailed, when the notice is deposited in the U.S. mail, postage prepaid, (2) if delivered by courier service, the earlier of when the notice is received or left at such stockholder’s address or (3) if given by electronic mail, when directed to such stockholder’s electronic mail address unless the stockholder has notified the Corporation in writing or by electronic transmission of an objection to receiving notice by electronic mail. A notice by electronic mail must include a prominent legend that the communication is an important notice regarding the Corporation.
Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under any provision of the DGCL, the Certificate of Incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice or electronic transmission to the Corporation. Notwithstanding the provisions of this paragraph, the Corporation may give a notice by electronic mail in accordance with the first paragraph of this section without obtaining the consent required by this paragraph.
Any notice given pursuant to the preceding paragraph shall be deemed given:
(i) | if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; |
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(ii) | if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and |
(iii) | if by any other form of electronic transmission, when directed to the stockholder. |
Notwithstanding the foregoing, a notice may not be given by an electronic transmission from and after the time that (1) the Corporation is unable to deliver by such electronic transmission two (2) consecutive notices given by the Corporation and (2) such inability becomes known to the Secretary or an Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, that the inadvertent failure to discover such inability shall not invalidate any meeting or other action.
An affidavit of the Secretary or an Assistant Secretary of the Corporation or of the transfer agent or other agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
ARTICLE IX - Indemnification
9.1 Indemnification of Directors and Officers.
The Corporation shall indemnify and hold harmless, to the fullest extent permitted by the DGCL as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”) by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or, while serving as a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity (a “covered person”), including, without limitation, service with respect to employee benefit plans, against all liability and loss suffered and expenses (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) reasonably incurred by such person in connection with any such Proceeding. Notwithstanding the preceding sentence, except as otherwise provided in Section 9.4, the Corporation shall be required to indemnify a person in connection with a Proceeding initiated by such person only if the Proceeding was authorized in the specific case by the Board.
9.2 Indemnification of Others.
The Corporation shall also have the power to indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any employee or agent of the Corporation who was or is made or is threatened to be made a party or is otherwise involved in any Proceeding by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person in connection with any such Proceeding.
9.3 Prepayment of Expenses.
The Corporation shall to the fullest extent not prohibited by applicable law pay the expenses (including, without limitation, attorneys’ fees) incurred by or on behalf of any covered person, and may also pay the expenses incurred by or on behalf of any employee or agent of the Corporation, in defending any Proceeding in advance of its final disposition; provided, however, that such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the person to repay all amounts advanced if it should be ultimately determined that the person is not entitled to be indemnified under this ARTICLE IX or otherwise.
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9.4 Determination; Claim.
If a claim for indemnification (following the final disposition of such Proceeding) under this ARTICLE IX is not paid in full within sixty (60) days, or a claim for advancement of expenses under this ARTICLE IX is not paid in full within thirty (30) days, after a written claim therefor has been received by the Corporation the claimant may thereafter (but not before) file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim to the fullest extent permitted by law. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.
9.5 Non-Exclusivity of Rights.
The rights conferred on any person by this ARTICLE IX shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these bylaws, agreement, vote of stockholders or disinterested directors or otherwise.
9.6 Insurance.
The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust enterprise or non-profit entity against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of the DGCL.
9.7 Other Indemnification.
The Corporation’s obligation, if any, to indemnify or advance expenses to any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or non-profit entity shall be reduced by any amount such person actually collects as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.
9.8 Continuation of Indemnification.
The rights to indemnification and to prepayment of expenses provided by, or granted pursuant to, this ARTICLE IX shall continue notwithstanding that the person has ceased to be a director or officer of the Corporation and shall inure to the benefit of the estate, heirs, executors, administrators, legatees and distributees of such person.
9.9 Amendment or Repeal; Interpretation.
The provisions of this ARTICLE IX shall constitute a contract between the Corporation, on the one hand, and, on the other hand, each individual who serves or has served as a director or officer of the Corporation (whether before or after the adoption of these bylaws), in consideration of such person’s performance of such services, and pursuant to this ARTICLE IX the Corporation intends to be legally bound to each such current or former director or officer of the Corporation. With respect to current and former directors and officers of the Corporation, the rights conferred under this ARTICLE IX are present contractual rights and such rights are fully vested, and shall be deemed to have vested fully, immediately upon adoption of theses bylaws. With respect to any directors or officers of the Corporation who commence service following adoption of these bylaws, the rights conferred under this provision shall be present contractual rights and such rights shall fully vest, and be deemed to have vested fully, immediately upon such director or officer commencing service as a director or officer of the Corporation. Any repeal or modification of the foregoing provisions of this ARTICLE IX shall not adversely affect any right or protection (i) hereunder of any person in respect of any act, omission or claim occurring or arising prior to the time of such repeal or modification or (ii) under any agreement providing for indemnification or advancement of expenses to an officer or director of the Corporation in effect prior to the time of such repeal or modification.
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Any reference to an officer of the Corporation in this ARTICLE IX shall be deemed to refer exclusively to the Chief Executive Officer and the Secretary of the Corporation, or other officer of the Corporation appointed by (x) the Board pursuant to ARTICLE V or (y) an officer to whom the Board has delegated the power to appoint officers pursuant to ARTICLE V, and any reference to an officer of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be deemed to refer exclusively to an officer appointed by the board of directors (or equivalent governing body) of such other entity pursuant to the certificate of incorporation and bylaws (or equivalent organizational documents) of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. The fact that any person who is or was an employee of the Corporation or an employee of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise has been given or has used the title of “Vice President” or any other title that could be construed to suggest or imply that such person is or may be an officer of the Corporation or of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall not result in such person being constituted as, or being deemed to be, an officer of the Corporation or of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise for purposes of this ARTICLE IX.
Article X - Amendments
The Board is expressly empowered to adopt, amend or repeal the bylaws of the Corporation. The stockholders also shall have power to adopt, amend or repeal the bylaws of the Corporation; provided, however, that such action by stockholders shall require, in addition to any other vote required by the Certificate of Incorporation or applicable law, the affirmative vote of the holders of at least two-thirds of the voting power of all the then-outstanding shares of voting stock of the Corporation with the power to vote generally in an election of directors, voting together as a single class.
Article XI - Definitions
As used in these bylaws, unless the context otherwise requires, the following terms shall have the following meanings:
An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, including the use of, or participation in, one or more electronic networks or databases (including one or more distributed electronic networks or databases), that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
An “electronic mail” means an electronic transmission directed to a unique electronic mail address (which electronic mail shall be deemed to include any files attached thereto and any information hyperlinked to a website if such electronic mail includes the contact information of an officer or agent of the Corporation who is available to assist with accessing such files and information).
An “electronic mail address” means a destination, commonly expressed as a string of characters, consisting of a unique user name or mailbox (commonly referred to as the “local part” of the address) and a reference to an internet domain (commonly referred to as the “domain part” of the address), whether or not displayed, to which electronic mail can be sent or delivered.
The term “person” means any individual, general partnership, limited partnership, limited liability company, corporation, trust, business trust, joint stock company, joint venture, unincorporated association, cooperative or association or any other legal entity or organization of whatever nature, and shall include any successor (by merger or otherwise) of such entity.
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Exhibit 10.1
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (“Agreement”) is made as of , 20 by and between AirSculpt Technologies, Inc., a Delaware corporation (the “Company”), and , [a member of the Board of Directors/ an officer] of the Company (“Indemnitee”). This Agreement supersedes and replaces any and all previous Agreements between the Company and Indemnitee covering indemnification and advancement.
RECITALS
WHEREAS, the Board of Directors of the Company (the “Board”) believes that highly competent persons have become more reluctant to serve publicly-held corporations as directors, officers, or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification and advancement of expenses against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;
WHEREAS, the Board has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The Amended and Restated Bylaws of the Company (the “Bylaws”) and the Amended and Restated Certificate of Incorporation of the Company (the “Certificate of Incorporation”) require indemnification of the officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (the “DGCL”). The Bylaws, Certificate of Incorporation, and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the board of directors, officers and other persons with respect to indemnification and advancement of expenses;
WHEREAS, the uncertainties relating to such insurance, to indemnification, and to advancement of expenses may increase the difficulty of attracting and retaining such persons;
WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company and its stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;
WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;
WHEREAS, this Agreement is a supplement to and in furtherance of the Bylaws, Certificate of Incorporation and any resolutions adopted pursuant thereto, and is not a substitute therefor, nor diminishes or abrogates any rights of Indemnitee thereunder; and
WHEREAS, Indemnitee does not regard the protection available under the Bylaws, Certificate of Incorporation, DGCL and insurance as adequate in the present circumstances, and may not be willing to serve or continue to serve as an officer or director without adequate additional protection, and the Company desires Indemnitee to serve or continue to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified and be advanced expenses.
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NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
Section 1. Services to the Company. Indemnitee agrees to serve as a [director/officer] of the Company. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law). This Agreement does not create any obligation on the Company to continue Indemnitee in such position and is not an employment contract between the Company (or any of its subsidiaries or any Enterprise) and Indemnitee.
Section 2. Definitions. As used in this Agreement:
(a) “Agent” means any person who is authorized by the Company or an Enterprise to act for or represent the interests of the Company or an Enterprise, respectively.
(b) A “Change in Control” occurs upon the earliest to occur after the date of this Agreement of any of the following events:
i. Acquisition of Stock by Third Party. Any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of the combined voting power of the Company’s then outstanding securities unless the change in relative beneficial ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors;
ii. Change in Board of Directors. During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(b)(i), 2(b)(iii) or 2(b)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board;
iii. Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;
iv. Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and
v. Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.
vi. For purposes of this Section 2(b), the following terms have the following meanings:
1 | “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time. |
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2 | “Person” has the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person excludes (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company. |
3 | “Beneficial Owner” has the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner excludes any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity. |
(c) “Corporate Status” describes the status of a person who is or was acting as a director, officer, employee, fiduciary, or Agent of the Company or an Enterprise.
(d) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.
(e) “Enterprise” means any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other entity for which Indemnitee is or was serving at the request of the Company as a director, officer, employee, or Agent.
(f) “Expenses” includes all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts and other professionals, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, and (ii) for purposes of Section 14(d) only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise. The parties agree that for the purposes of any advancement of Expenses for which Indemnitee has made written demand to the Company in accordance with this Agreement, all Expenses included in such demand that are certified by affidavit of Indemnitee’s counsel as being reasonable in the good faith judgment of such counsel will be presumed conclusively to be reasonable. Expenses, however, do not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
(g) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” does not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
(h) “Potential Change in Control” means the occurrence of any of the following events: (i) the Company enters into any written or oral agreement, undertaking or arrangement, the consummation of which would result in the occurrence of a Change in Control; (ii) any Person or the Company publicly announces an intention to take or consider taking actions which if consummated would constitute a Change in Control; (iii) any Person who becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 5% or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors increases his beneficial ownership of such securities by 5% or more over the percentage so owned by such Person on the date hereof; or (iv) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.
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(i) The term “Proceeding” includes any threatened, pending or completed action, suit, claim, counterclaim, cross claim, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative, legislative, or investigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is or will be involved as a party, potential party, non-party witness or otherwise by reason of Indemnitee’s Corporate Status or by reason of any action taken by Indemnitee (or a failure to take action by Indemnitee) or of any action (or failure to act) on Indemnitee’s part while acting pursuant to Indemnitee’s Corporate Status, in each case whether or not serving in such capacity at the time any liability or Expense is incurred for which indemnification, reimbursement, or advancement of Expenses can be provided under this Agreement. A Proceeding also includes a situation the Indemnitee believes in good faith may lead to or culminate in the institution of a Proceeding.
(j) [“Fund Indemnitor” means [insert names]]
Section 3. Indemnity in Third-Party Proceedings. The Company will indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, the Company will indemnify Indemnitee to the fullest extent permitted by applicable law against all Expenses, judgments, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines and amounts paid in settlement) actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding had no reasonable cause to believe that Indemnitee’s conduct was unlawful.
Section 4. Indemnity in Proceedings by or in the Right of the Company. The Company will indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, the Company will indemnify Indemnitee to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. The Company will not indemnify Indemnitee for Expenses under this Section 4 related to any claim, issue or matter in a Proceeding for which Indemnitee has been finally adjudged by a court to be liable to the Company, unless, and only to the extent that, the Delaware Court of Chancery or any court in which the Proceeding was brought determines upon application by Indemnitee that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.
Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, to the fullest extent permitted by applicable law, the Company will indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with any Proceeding the extent that Indemnitee is successful, on the merits or otherwise. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company will indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with or related to each successfully resolved claim, issue or matter to the fullest extent permitted by law. For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, will be deemed to be a successful result as to such claim, issue or matter.
Section 6. Indemnification For Expenses of a Witness. Notwithstanding any other provision of this Agreement and to the fullest extent permitted by applicable law, the Company will indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with any Proceeding to which Indemnitee is not a party but to which Indemnitee is a witness, deponent, interviewee, or otherwise asked to participate.
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Section 7. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company will indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.
Section 8. Additional Indemnification. Notwithstanding any limitation in Sections 3, 4, or 5, the Company will indemnify Indemnitee to the fullest extent permitted by applicable law (including but not limited to, the DGCL and any amendments to or replacements of the DGCL adopted after the date of this Agreement that expand the Company’s ability to indemnify its officers and directors) if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor).
Section 9. Exclusions. Notwithstanding any provision in this Agreement, the Company is not obligated under this Agreement to make any indemnification payment to Indemnitee in connection with any Proceeding:
(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except to the extent provided in Section 16(b) and except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or
(b) for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (as defined in Section 2(b) hereof) or similar provisions of state statutory law or common law, (ii) any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act) or (iii) any reimbursement of the Company by Indemnitee of any compensation pursuant to any compensation recoupment or clawback policy adopted by the Board or the compensation committee of the Board, including but not limited to any such policy adopted to comply with stock exchange listing requirements implementing Section 10D of the Exchange Act; or
(c) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Proceeding or part of any Proceeding is to enforce Indemnitee’s rights to indemnification or advancement, of Expenses, including a Proceeding (or any part of any Proceeding) initiated pursuant to Section 14 of this Agreement, (ii) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (iii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.
Section 10. Advances of Expenses.
(a) The Company will advance, to the extent not prohibited by law, the Expenses incurred by Indemnitee in connection with any Proceeding (or any part of any Proceeding) not initiated by Indemnitee or any Proceeding (or any part of any Proceeding) initiated by Indemnitee if (i) the Proceeding or part of any Proceeding is to enforce Indemnitee’s rights to obtain indemnification or advancement of Expenses from the Company or Enterprise, including a proceeding initiated pursuant to Section 14 or (ii) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation. The Company will advance the Expenses within thirty (30) days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding.
(b) Advances will be unsecured and interest free. Indemnitee undertakes to repay the amounts advanced (without interest) to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company, thus Indemnitee qualifies for advances upon the execution of this Agreement and delivery to the Company. No other form of undertaking is required other than the execution of this Agreement. The Company will make advances without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement.
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Section 11. Procedure for Notification of Claim for Indemnification or Advancement.
(a) Indemnitee will notify the Company in writing of any Proceeding with respect to which Indemnitee intends to seek indemnification or advancement of Expenses hereunder as soon as reasonably practicable following the receipt by Indemnitee of written notice thereof. Indemnitee will include in the written notification to the Company a description of the nature of the Proceeding and the facts underlying the Proceeding and provide such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of such Proceeding. Indemnitee’s failure to notify the Company will not relieve the Company from any obligation it may have to Indemnitee under this Agreement, and any delay in so notifying the Company will not constitute a waiver by Indemnitee of any rights under this Agreement. The Secretary of the Company will, promptly upon receipt of such a request for indemnification or advancement, advise the Board in writing that Indemnitee has requested indemnification or advancement.
(b) The Company will be entitled to participate in the Proceeding at its own expense.
Section 12. Procedure Upon Application for Indemnification.
(a) Unless a Change of Control has occurred, the determination of Indemnitee’s entitlement to indemnification will be made:
i. by a majority vote of the Disinterested Directors, even though less than a quorum of the Board;
ii. by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board;
iii. if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by written opinion provided by Independent Counsel selected by the Board; or
iv. if so directed by the Board, by the stockholders of the Company.
(b) If a Change in Control has occurred, the determination of Indemnitee’s entitlement to indemnification will be made by written opinion provided by Independent Counsel selected by Indemnitee (unless Indemnitee requests such selection be made by the Board).
(c) The party selecting Independent Counsel pursuant to subsection (a)(iii) or (b) of this Section 12 will provide written notice of the selection to the other party. The notified party may, within ten (10) days after receiving written notice of the selection of Independent Counsel, deliver to the selecting party a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection will set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected will act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Delaware Court has determined that such objection is without merit. If, within thirty (30) days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 11(a) hereof and the final disposition of the Proceeding, Independent Counsel has not been selected or, if selected, any objection to has not been resolved, either the Company or Indemnitee may petition the Delaware Court for the appointment as Independent Counsel of a person selected by such court or by such other person as such court designates. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel will be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).
(d) Indemnitee will cooperate with the person, persons or entity making the determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. The Company will advance and pay any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making the indemnification determination irrespective of the determination as to Indemnitee’s entitlement to indemnification and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. The Company promptly will advise Indemnitee in writing of the determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied and providing a copy of any written opinion provided to the Board by Independent Counsel.
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(e) If it is determined that Indemnitee is entitled to indemnification, the Company will make payment to Indemnitee within thirty (30) days after such determination.
Section 13. Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination will, to the fullest extent not prohibited by law, presume Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 11(a) of this Agreement, and the Company will, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption. Neither the failure of the Company (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, will be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
(b) If the determination of the Indemnitee’s entitlement to indemnification has not been made pursuant to Section 12 within sixty (60) days after the later of (i) receipt by the Company of Indemnitee’s request for indemnification pursuant to Section 11(a) and (ii) the final disposition of the Proceeding for which Indemnitee requested Indemnification (the “Determination Period”), the requisite determination of entitlement to indemnification will, to the fullest extent not prohibited by law, be deemed to have been made and Indemnitee will be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law. The Determination Period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, the Determination Period may be extended an additional fifteen (15) days if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 12(a)(iv) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, will not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
(d) For purposes of any determination of good faith, Indemnitee will be deemed to have acted in good faith if Indemnitee acted based on the records or books of account of the Company, its subsidiaries, or an Enterprise, including financial statements, or on information supplied to Indemnitee by the directors or officers of the Company, its subsidiaries, or an Enterprise in the course of their duties, or on the advice of legal counsel for the Company, its subsidiaries, or an Enterprise or on information or records given or reports made to the Company or an Enterprise by an independent certified public accountant or by an appraiser, financial advisor or other expert selected with reasonable care by or on behalf of the Company, its subsidiaries, or an Enterprise. Further, Indemnitee will be deemed to have acted in a manner “not opposed to the best interests of the Company,” as referred to in this Agreement if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan. The provisions of this Section 13(d) is not exclusive and does not limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.
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(e) The knowledge and/or actions, or failure to act, of any director, officer, trustee, partner, managing member, fiduciary, Agent or employee of the Enterprise may not be imputed to Indemnitee for purposes of determining Indemnitee’s right to indemnification under this Agreement.
Section 14. Remedies of Indemnitee.
(a) Indemnitee may commence litigation against the Company in the Delaware Court of Chancery to obtain indemnification or advancement of Expenses provided by this Agreement in the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) the Company does not advance Expenses pursuant to Section 10 of this Agreement, (iii) the determination of entitlement to indemnification is not made pursuant to Section 12 of this Agreement within the Determination Period, (iv) the Company does not indemnify Indemnitee pursuant to Section 5 or 6 or the second to last sentence of Section 12(d) of this Agreement within thirty (30) days after receipt by the Company of a written request therefor, (v) the Company does not indemnify Indemnitee pursuant to Section 3, 4, 7, or 8 of this Agreement within thirty (30) days after a determination has been made that Indemnitee is entitled to indemnification, or (vi) in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or Proceeding designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be provided to the Indemnitee hereunder. Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Indemnitee must commence such Proceeding seeking an adjudication or an award in arbitration within one hundred and eighty (180) days following the date on which Indemnitee first has the right to commence such Proceeding pursuant to this Section 14(a); provided, however, that the foregoing clause does not apply in respect of a Proceeding brought by Indemnitee to enforce Indemnitee’s rights under Section 5 of this Agreement. The Company will not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.
(b) If a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 14 will be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee may not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 14 the Company will have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be and will not introduce evidence of the determination made pursuant to Section 12 of this Agreement.
(c) If a determination is made pursuant to Section 12 of this Agreement that Indemnitee is entitled to indemnification, the Company will be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.
(d) The Company is, to the fullest extent not prohibited by law, precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and will stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.
(e) It is the intent of the Company that, to the fullest extent permitted by law, the Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder. The Company, to the fullest extent permitted by law, will (within thirty (30) days after receipt by the Company of a written request therefor) advance to Indemnitee such Expenses which are incurred by Indemnitee in connection with any action concerning this Agreement, Indemnitee’s right to indemnification or advancement of Expenses from the Company, or concerning any directors’ and officers’ liability insurance policies maintained by the Company, and will indemnify Indemnitee against any and all such Expenses unless the court determines that each of the Indemnitee’s claims in such Proceeding were made in bad faith or were frivolous or are prohibited by law.
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Section 15. [Reserved].
Section 16. Non-exclusivity; Survival of Rights; Insurance; Subrogation.
(a) The indemnification and advancement of Expenses provided by this Agreement are not exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. The indemnification and advancement of Expenses provided by this Agreement may not be limited or restricted by any amendment, alteration or repeal of this Agreement in any way with respect to any action taken or omitted by Indemnitee in Indemnitee’s Corporate Status occurring prior to any amendment, alteration or repeal of this Agreement. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Bylaws, Certificate of Incorporation, or this Agreement, it is the intent of the parties hereto that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy is cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, will not prevent the concurrent assertion or employment of any other right or remedy.
(b) The Company hereby acknowledges that Indemnitee may have certain rights to indemnification, advancement of Expenses and/or insurance provided by one or more other Persons with whom or which Indemnitee may be associated [(including, without limitation, any Fund Indemnitor)]. The relationship between the Company and such other Persons, other than an Enterprise, with respect to the Indemnitee’s rights to indemnification, advancement of Expenses, and insurance is described by this subsection, subject to the provisions of subsection (d) of this Section 16 with respect to a Proceeding concerning Indemnitee’s Corporate Status with an Enterprise.
i. The Company hereby acknowledges and agrees:
1) the Company is the indemnitor of first resort with respect to any request for indemnification or advancement of Expenses made pursuant to this Agreement concerning any Proceeding arising from or related to Indemnitee’s Corporate Status with the Company;
2) the Company is primarily liable for all indemnification and indemnification or advancement of Expenses obligations for any Proceeding arising from or related to Indemnitee’s Corporate Status, whether created by law, organizational or constituent documents, contract (including this Agreement) or otherwise;
3) any obligation of any other Persons with whom or which Indemnitee may be associated [(including, without limitation, any Fund Indemnitor)] to indemnify Indemnitee and/or advance Expenses to Indemnitee in respect of any proceeding are secondary to the obligations of the Company’s obligations;
4) the Company will indemnify Indemnitee and advance Expenses to Indemnitee hereunder to the fullest extent provided herein without regard to any rights Indemnitee may have against any other Person with whom or which Indemnitee may be associated [(including, any Fund Indemnitor)] or insurer of any such Person; and
ii. the Company irrevocably waives, relinquishes and releases (A) any other Person with whom or which Indemnitee may be associated [(including, without limitation, any Fund Indemnitor)] from any claim of contribution, subrogation, reimbursement, exoneration or indemnification, or any other recovery of any kind in respect of amounts paid by the Company to Indemnitee pursuant to this Agreement [and (B) any right to participate in any claim or remedy of Indemnitee against any Fund Indemnitor (or former Fund Indemnitor), whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Fund Indemnitor (or former Fund Indemnitor), directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right].
iii. In the event any other Person with whom or which Indemnitee may be associated [(including, without limitation, any Fund Indemnitor)] or their insurers advances or extinguishes any liability or loss for Indemnitee, the payor has a right of subrogation against the Company or its insurers for all amounts so paid which would otherwise be payable by the Company or its insurers under this Agreement. In no event will payment by any other Person with whom or which Indemnitee may be associated [(including, without limitation, any Fund Indemnitor)] or their insurers affect the obligations of the Company hereunder or shift primary liability for the Company’s obligation to indemnify or advance of Expenses to any other Person with whom or which Indemnitee may be associated [(including, without limitation, any Fund Indemnitor)].
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iv. Any indemnification or advancement of Expenses provided by any other Person with whom or which Indemnitee may be associated [(including, without limitation, any Fund Indemnitor)] is specifically in excess over the Company’s obligation to indemnify and advance Expenses or any valid and collectible insurance (including but not limited to any malpractice insurance or professional errors and omissions insurance) provided by the Company.
(c) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or Agents of the Company, the Company will obtain a policy or policies covering Indemnitee to the maximum extent of the coverage available for any such director, officer, employee or Agent under such policy or policies, including coverage in the event the Company does not or cannot, for any reason, indemnify or advance Expenses to Indemnitee as required by this Agreement. If, at the time of the receipt of a notice of a claim pursuant to this Agreement, the Company has director and officer liability insurance in effect, the Company will give prompt notice of such claim or of the commencement of a Proceeding, as the case may be, to the insurers in accordance with the procedures set forth in the respective policies. The Company will thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies. Indemnitee agrees to assist the Company efforts to cause the insurers to pay such amounts and will comply with the terms of such policies, including selection of approved panel counsel, if required.
(d) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee for any Proceeding concerning Indemnitee’s Corporate Status with an Enterprise will be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such Enterprise. The Company and Indemnitee intend that any such Enterprise (and its insurers) be the indemnitor of first resort with respect to indemnification and advancement of Expenses for any Proceeding related to or arising from Indemnitee’s Corporate Status with such Enterprise. The Company’s obligation to indemnify and advance Expenses to Indemnitee is secondary to the obligations the Enterprise or its insurers owe to Indemnitee. Indemnitee agrees to take all reasonably necessary and desirable action to obtain from an Enterprise indemnification and advancement of Expenses for any Proceeding related to or arising from Indemnitee’s Corporate Status with such Enterprise.
(e) In the event of any payment made by the Company under this Agreement, the Company will be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee from any Enterprise or insurance carrier. Indemnitee will execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
Section 17. Duration of Agreement. This Agreement continues until and terminates upon the later of: (a) ten (10) years after the date that Indemnitee ceases to have a Corporate Status or (b) one (1) year after the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any Proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement relating thereto. The indemnification and advancement of Expenses rights provided by or granted pursuant to this Agreement are binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), continue as to an Indemnitee who has ceased to be a director, officer, employee or Agent of the Company or of any other Enterprise, and inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.
Section 18. Severability. If any provision or provisions of this Agreement is held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) will not in any way be affected or impaired thereby and remain enforceable to the fullest extent permitted by law; (b) such provision or provisions will be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) will be construed so as to give effect to the intent manifested thereby.
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Section 19. Interpretation. Any ambiguity in the terms of this Agreement will be resolved in favor of Indemnitee and in a manner to provide the maximum indemnification and advancement of Expenses permitted by law. The Company and Indemnitee intend that this Agreement provide to the fullest extent permitted by law for indemnification and advancement in excess of that expressly provided, without limitation, by the Certificate of Incorporation, the Bylaws, vote of the Company stockholders or disinterested directors, or applicable law.
Section 20. Enforcement.
(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving or continuing to serve as a director or officer of the Company.
(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Certificate of Incorporation, the Bylaws and applicable law, and is not a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.
Section 21. Modification and Waiver. No supplement, modification or amendment of this Agreement is binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement will be deemed or constitutes a waiver of any other provisions of this Agreement nor will any waiver constitute a continuing waiver.
Section 22. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company does not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise.
Section 23. Notices. All notices, requests, demands and other communications under this Agreement will be in writing and will be deemed to have been duly given if (a) delivered by hand to the other party, (b) sent by reputable overnight courier to the other party or (c) sent by facsimile transmission or electronic mail, with receipt of oral confirmation that such communication has been received:
(a) If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee provides to the Company.
(b) If to the Company to:
Name: | AirSculpt Technologies, Inc. | |
Address: |
400 Alton Road, Unit TH-103M Miami Beach, Florida 33139 |
|
Attention: | ||
Email: |
or to any other address as may have been furnished to Indemnitee by the Company.
Section 24. Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, will contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and Agents) and Indemnitee in connection with such event(s) and/or transaction(s).
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Section 25. Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties are governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 14(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or Proceeding arising out of or in connection with this Agreement may be brought only in the Delaware Court of Chancery and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or Proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or Proceeding in the Delaware Court, and (iv) waive, and agree not to plead or to make, any claim that any such action or Proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.
Section 26. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which will for all purposes be deemed to be an original but all of which together constitutes one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.
Section 27. Headings. The headings of this Agreement are inserted for convenience only and do not constitute part of this Agreement or affect the construction thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.
AIRSCULPT TECHNOLOGIES, INC. | INDEMNITEE | |||
By: | ||||
Name: | Name: | |||
Office: | Address: | |||
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EXHIBIT 10.5
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), is entered into by and between EBS Enterprises, LLC (“EBS Enterprises”), a Delaware limited liability company and Dr. Aaron Rollins (“Executive”), and shall be effective immediately following the time, and subject to, AirSculpt Technologies, Inc.’s (“AirSculpt” and together with EBS Enterprises, “Company”) registration statement on Form S-1 related to its initial public offering being declared effective (the “IPO”) by the Securities and Exchange Commission (the “Effective Date”).
W I T N E S S E T H:
WHEREAS, Executive and EBS Enterprises previously entered into an Employment Agreement effective as of October 2, 2018 (the “Prior Agreement”);
WHEREAS, in connection with AirSculpt’s IPO it is anticipated that EBS Enterprises will become a wholly-owned subsidiary of AirSculpt;
WHEREAS, in connection with, and subject to the occurrence of, the IPO, Executive and Company desire to amend and restate the Prior Agreement;
WHEREAS, Company desires to continue to employ Executive and as Chief Executive Officer of Company in accordance with the terms and conditions of this Agreement; and
WHEREAS, Executive desires to continue to serve as Chief Executive Officer of Company in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and obligations hereinafter set forth, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Employment and Acceptance. During the Term (as defined in Section 3 below), Company shall employ Executive, and Executive shall continue to serve Company, subject to the terms of this Agreement. If, for any reason, an IPO does not occur prior to January 1, 2022, then this Agreement will not be effective and will be null and void, and the Prior Agreement will be reinstated with full force and effect.
2. Title; Duties and Obligations; Location.
2.1 Title. Company shall employ Executive to render services to Company. Executive shall serve in the capacity of Chief Executive Officer of Company.
2.2 Best Efforts/Duties. The duties and responsibilities of Executive shall include such duties and responsibilities as assigned by Company’s Board of Directors (the “Board”) from time to time consistent with the position of Chief Executive Officer. Executive shall perform faithfully and diligently all such duties assigned to Executive. Company reserves the right to modify Executive’s position and duties at any time in its sole and absolute discretion; provided, that such position and the duties assigned are consistent with the position of a Chief Executive Officer or higher level of authority or prestige. In Executive’s capacity as Chief Executive Officer of Company, Executive shall report to, and be subject to the lawful direction of, the Board. Executive will expend Executive’s best efforts on behalf of Company, and will abide by all policies of Company applicable to Company’s executives generally and all decisions made by the Board, all in accordance with applicable federal, state and local laws, regulations or ordinances. Executive will act in the best interest of Company at all times in carrying out his duties and responsibilities under this Agreement. Except as permitted under subsections 2.5 (i) through (iii) below, Executive shall devote Executive’s full business efforts to the performance, to the best of his ability, experience and talent, of Executive’s assigned duties for Company. For the avoidance of doubt, the parties acknowledge and agree that Executive is not employed hereunder in his professional capacity as a physician and his duties and responsibilities on behalf of Company shall not include any act, service or duty that constitutes the practice of medicine under applicable law, and nothing contained in this Agreement requires either party to refer any patient or business to any person or entity.
2.3 Other Positions. In addition to serving in the capacity of Chief Executive Officer of Company, Executive also may serve in such other executive-level positions or capacities as may, from time to time, be reasonably requested by the Board, including, without limitation (subject to election, appointment, re-election or re-appointment, as applicable) as an officer of any of Company’s subsidiaries and/or affiliates, in each case, for no additional compensation. For sake of clarity, nothing contained in this Section 2.3 prohibits Executive from receiving compensation for services to a Managed Practice as permitted in subsection 2.5(i) below.
2.4 Compliance with Company Policies. Subject to Section 6 hereof, during the Term, Executive shall be in conformance and comply with all Company written or established policies, rules and regulations governing the conduct of its employees, now in effect, or as subsequently adopted or amended to the extent such policies are in accordance with applicable federal, state and local laws, regulations and ordinances.
2.5 Time Commitment. During the Term, Executive shall use his best efforts to promote the interests of Company (and, to the extent he serves one or more subsidiaries and/or affiliates pursuant to Section 2.3 hereof, its applicable subsidiaries or affiliates) and, except as provided in subsections (i)-(iii) below, shall devote all of his business time to the performance of his duties for Company (and, to the extent he serves one or more subsidiaries or affiliates pursuant to Section 2.3 hereof, its applicable subsidiaries or affiliates) and, shall not, directly or indirectly, render any services to any other person or organization, whether for compensation or otherwise, except with the Board’s prior written consent (which shall not be unreasonably withheld), until after the one year anniversary of the Effective Date; provided, that nothing in this Agreement shall prevent Executive from (i) performing services in his professional capacity as a physician for or on behalf of a Managed Practice (as defined in Section 7.1 below) and for him to be compensated for such services, as and to the extent agreed between Executive and Company, provided such services do not interfere with performance of Executive’s duties hereunder; (ii) participating in charitable, civic, educational, professional, community or industry non-profit associations and organizations and (iii) managing Executive’s passive personal investments, so long as such activities described in clauses (i) through (iii) do not, individually or in the aggregate, materially interfere or conflict with Executive’s duties hereunder, create a business or fiduciary conflict or violate the Employee Covenants Agreement by and between Executive and EBS Enterprises, LLC dated of October 2, 2018 (the “Covenant Agreement”) (in each case, as determined by the Board). Notwithstanding the foregoing, the Board will review the activities in clauses (i) through (iii) of the preceding sentence on an ongoing basis and reserves the right to prohibit any such activities that it determines in good faith materially interfere with performance of Executive’s duties hereunder, and will provide Executive with written notice of such determination. If the Board so prohibits such activities, Executive will be given a commercially reasonable period of time to extract himself from such activities, during which time he will not be considered in breach of this Agreement.
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2.6 Location. Executive’s services shall be performed principally at Company’s principal office located in Miami, Florida. However, from time to time, Executive may be required by his job responsibilities to travel on Company business, and Executive agrees to do so. Executive’s work schedule shall be determined and managed by Executive in his sole discretion, provided, however, Executive performs all duties necessary in his capacity as the Company’s Chief Executive Officer.
3. Term. The employment relationship pursuant to this Agreement shall commence on the Effective Date and continue until terminated in accordance with Section 7 below (such period of the employment relationship shall be referred to herein as the “Term”). For avoidance of doubt, Executive’s employment shall be “at-will” and may be terminated by either party at any time in accordance with the terms of this Agreement.
4. Compensation. For the services rendered by Executive in any capacity under this Agreement during the Term (including, without limitation, serving as an officer, director or member of any committee of the Board), Executive shall be compensated as follows (subject, in each case, to the provisions of Section 4 below):
4.1 Base Salary. As compensation for Executive’s performance of Executive’s duties hereunder, beginning as of the Effective Date, Company shall pay to Executive a salary at the annualized rate of $875,000, payable in substantially equal installments in accordance with Company’s normal payroll practices as in effect from time to time. The salary may be reviewed annually by the Board or a committee thereof and may be increased, but not decreased, unless such decrease is agreed to by Executive. As used herein Executive’s “Salary” shall be his salary as in effect from time to time after any such adjustments. Company shall deduct from each such installment all amounts required to be deducted or withheld under applicable law or under any employee benefit plan or program in which Executive participates.
4.2 Annual Bonus. In addition to the Salary, Executive shall be eligible for an annual target cash performance bonus of 100% of Executive’s Salary (the “Bonus”) for each fiscal year during the Term (pro-rated for any partial years), based upon achievement of individual and/or Company performance criteria, as determined annually by the Board in its sole and absolute discretion. Any Bonus for a fiscal year to the extent earned, shall be paid in a lump sum at a time established by the Board but no later than March 15 of the calendar year immediately following the last day of the fiscal year to which the Bonus relates. Executive must be actively employed with Company at the time of such payment in order to receive the Bonus for that fiscal year.
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4.3 Initial Equity Award. As soon as reasonably practicable after the Effective Date, Executive will be granted an equity award in respect of the number of shares of common stock equal to 3.5% of the common stock of AirSculpt outstanding upon effectiveness of AirSculpt’s registration statement on Form S-1 related to the IPO (the “Initial Equity Award”), excluding the underwriter’s overallotment. The Initial Equity Award shall consist of 50% restricted stock units and 50% performance-based restricted stock units; which awards shall be substantially consistent with the forms of award agreement attached as Exhibit B and Exhibit C hereto. All equity grants are subject to the approval of the Board.
4.4 Annual Equity Awards. Executive will be eligible to participate in the Company’s annual equity grant program. Executive’s first annual equity grant will be awarded in the first quarter of calendar year 2022 and with a grant date fair value as reported for financial reporting purposes of 200% of Executive’s Salary (the “Annual Equity Award”). The Annual Equity Award may be granted in any form allowed under the Company’s 2021 Equity Incentive Plan with vesting terms and conditions as set forth by the Board in its sole and absolute discretion. The Annual Equity Award for 2022 will include restricted stock units that vest over three years in equal annual installments as a portion of the equity award. Each Annual Equity Award shall be subject to the terms and conditions of the applicable grant agreement. All equity grants are subject to the approval of the Board.
5. Benefits.
5.1 Customary Benefits. Executive will be eligible for all customary and usual retirement and welfare benefits (excluding, for the avoidance of doubt, bonus plans not expressly referred to in this Agreement and severance plans/programs/policies, if any) generally available to executives of Company, subject to the terms and conditions of such benefit plans. Company reserves the right to change or eliminate benefits on a prospective basis, at any time and from time to time.
5.2 Paid Time Off. Executive shall be entitled to paid vacation, holidays, personal days and sick leave in accordance with the policies, programs and practices of Company in effect from time to time, but in no event less than four (4) weeks per calendar year (pro-rated for any partial years). Such vacation shall be taken at such intervals as shall be appropriate and consistent with the proper performance of Executive’s duties hereunder.
5.3 Termination of Management Agreement and Equityholder Bonus. In connection with the IPO, it is anticipated that the Management Agreement dated as of October 2, 2018 by and among Vesey Street Capital Partners, L.L.C. (“VSCP”), a Delaware limited liability company, and EBS Parent LLC, a Delaware limited liability company will be terminated and a termination fee will be paid to VSCP under such Management Agreement (the “VSCP Termination Fee”). In connection with the termination of the Equityholder Bonus (as defined in the Prior Agreement), you will be entitled to a termination payment in an amount determined by the Board in good faith consistent with the VSCP Termination Fee (and designed to pay you an amount for the termination of your Equityholder Bonus that is proportional to the VSCP Termination Fee).
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6. Business Expenses. Company shall reimburse Executive during the Term, for all reasonable out-of-pocket business expenses incurred by Executive in the performance of his duties hereunder consistent with level and the manner Executive has historically received such reimbursement and otherwise in accordance with the Company’s expense reimbursement policies as in effect from time to time, provided, that in the event of a conflict between Executive’s historic business reimbursement practices and the Company’s reimbursement policies, the historic business reimbursement practices shall govern. In order to receive such reimbursement, Executive shall furnish to Company documentary evidence of each such expense in the form required to comply with Company’s policies.
7. Termination of Executive’s Employment.
7.1 Termination for Cause by Company. Although Company anticipates a mutually rewarding employment relationship with Executive, Company may terminate Executive’s employment immediately at any time for Cause. For purposes of this Agreement, “Cause” is defined as: (i) fraud, embezzlement or other misappropriation by Executive of funds or property of Company or any of its subsidiaries or affiliates (collectively, the “Company Group”, and each, a “Company Group Member”) or any Persons or professionals for which Company or its subsidiaries or affiliates provides business, management, administrative, marketing or other support services, including but not limited to Elite Body Sculpture, P.C., Madison Avenue Medical PLLC, EBS Illinois, LLC, EBS - Texas, LLC, EBS Georgia, LLC and any other corporation, limited liability company, partnership or association that is party to a management services agreement or similar agreement with Company or any of Company’s subsidiaries or affiliates for the rendering of certain management services and other related services by Company or any of Company’s subsidiaries or affiliates (each, a “Managed Practice” and collectively, “Managed Practices”); (ii) any gross misconduct by Executive that is injurious, directly or indirectly, in any material respect to any Company Group Member or any Managed Practice; (iii) Executive’s failure to perform, or breach of, in any material respect, any of his obligations under this Agreement or the Covenant Agreement or any other agreement or contract between Executive and any Company Group Member; (iv) Executive’s exclusion, debarment, termination or suspension under any Medicare, Medicaid, TRICARE or other federal, state or government health care program, or commission or conviction of, indictment for or plea of guilty or no-contest to, any felony or any crime involving moral turpitude, embezzlement, fraud or self-dealing or any crime which could reasonably be expected to subject Executive, any Company Group Member, services or Managed Practices to exclusion, debarment, termination or suspension under any Medicare, Medicaid, TRICARE or other federal, state or government health care program; (v) Executive’s license to practice medicine in the State of California or New York is revoked, terminated, cancelled, suspended, relinquished or placed on probationary status; (vi) Executive’s use of alcohol or controlled substances that impairs his ability to perform his duties and responsibilities with respect to any Company Group Member or Managed Practices in any material respect; (vii) Executive challenging the legality, validity or enforceability of any of the Managed Practice documents; (viii) termination by a Managed Practice owned or controlled by Executive of a managed services agreement with any Company Group Member for reasons other than a material breach of such agreement by the Company Group Member; (ix) the willful breach by a Managed Practice owned or controlled by Executive of a management services agreement with any Company Group Member; or (x) Executive’s failure to give timely notice of his resignation under Section 7.4. Notwithstanding the foregoing, “Cause” shall not be deemed to exist under clauses (ii), (iii), (ix) or (x) of the immediately preceding sentence unless Company has provided written notice to Executive specifying in reasonable detail the acts or omissions of Executive that Company alleges constitute “Cause” and Executive shall have failed to rescind any such act or cure any such omission within thirty (30) calendar days after receipt of the notice (unless such failure is not susceptible to cure, as determined by the Board).
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In the event Executive’s employment is terminated in accordance with this Section 7.1, Company shall pay the following amounts to Executive within the time period required by applicable law:
(i) any accrued but unpaid Salary (as determined pursuant to Section 4.1 hereof) for services rendered prior to the date of Executive’s termination of employment (the “Termination Date”), which accrued but unpaid Salary shall be paid on or before the time required by law;
(ii) payment for any accrued but unused paid time off;
(iii) expenses reimbursable under Section 6 hereof incurred prior to the Termination Date but not yet reimbursed, which reimbursable (but not yet reimbursed) expenses, if any, shall (subject to Executive’s timely submission of invoices) be paid on or before the time required by law; and
(iv) vested entitlements under any other Company benefit plan or program (with the exception of those, if any, relating to severance) that Executive is otherwise entitled to receive under such plan, program, policy or practice on the Termination Date, in each case, in accordance with (and subject to the terms, conditions and limitations set forth in) such plan, program, policy, or practice.
The amounts described in clauses (i) through (iv) above shall be referred to herein as the “Accrued Obligations.” All other Company obligations to Executive pursuant to this Agreement will become automatically terminated and completely extinguished.
7.2 Termination Without Cause by Company/Termination by Executive For Good Reason. Company may terminate Executive’s employment under this Agreement without Cause at any time upon written notice to Executive or Executive may resign with Good Reason subject to the notification requirements and the Cure Period (as defined below), in each case as set forth below. In the event of such termination, Executive will receive:
(i) The Accrued Obligations and any Bonus earned in respect of a prior completed year that has not yet been paid; and
(ii) Subject to Section 7.6, a payment in the aggregate amount equal to two (2) times the sum of (x) Executive’s Salary (at the rate as of the Termination Date) plus (y) Executive’s target Bonus, payable (less applicable withholdings and deductions) in a lump sum on the next regular pay date of Company following the date that the Release becomes effective and is no longer subject to revocation, in accordance with Company’s then-current payroll practices, but in no event later than March 15 of the calendar year immediately following the calendar year in which the Termination Date occurs. The payment referred to in this clause (ii) is referred to as the “Severance Payment.”
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For purposes of this Agreement, “Good Reason” is defined as any one or more of the following without Executive’s prior written consent:
(a) a material reduction of Executive’s title, authority, duties or responsibilities with Company;
(b) a material reduction in Executive’s Salary;
(c) relocation of Executive’s principal place of work to a place more than twenty-five (25) miles from the Company’s headquarters in Miami, Florida as of the date hereof, unless such relocation is otherwise agreed to in writing by Executive; or
(d) a material breach by the Company of this Agreement.
Notwithstanding the foregoing, Good Reason shall not exist unless Executive notifies Company in writing of the existence of the applicable condition specified above not later than thirty (30) days after the initial existence of the condition, and Company fails to remedy such condition within fifteen (15) days after receipt of such notice (the “Cure Period”); provided, however, that if Company cannot remedy such condition within such fifteen (15) day period for reasons outside of Company’s reasonable control, as determined by the Board in its sole and absolute discretion, the Cure Period shall be extended to provide an additional period to remedy such condition, which extension shall not in any case exceed fifteen (15) calendar days. In the event Company fails to remedy the condition constituting Good Reason during the applicable Cure Period (after giving effect to any extension of the Cure Period), Executive’s resignation for Good Reason must occur, if at all, within thirty (30) calendar days following the expiration of the Cure Period.
7.3 Termination of Employment due to Executive’s death or Disability.
Executive’s employment under this Agreement shall terminate automatically upon Executive’s death. Company may terminate Executive’s employment under this Agreement due to Executive’s Disability (as defined below). In the event of such termination, Executive (or Executive’s estate, as the case may be) will be entitled to receive, the Accrued Obligations, and any Bonus earned in respect of a prior completed year that has not yet been paid, and no other amount, except as required by applicable law.
All other Company obligations to Executive pursuant to this Agreement will be automatically terminated and completely extinguished. For purposes of this Agreement “Disability” means Executive’s physical or mental illness, injury or infirmity which prevents Executive from performing Executive’s material duties for a period of (A) one-hundred and eighty (180) consecutive calendar days or (B) an aggregate of ninety (90) calendar days out of any consecutive six (6) month period.
7.4 Voluntary Resignation by Executive Without Good Reason. Executive may voluntarily resign Executive’s position with Company without Good Reason at any time, upon sixty (60) days’ advance written notice. The effectiveness of any such voluntary resignation may be accelerated by Company in its sole and absolute discretion. In the event of such termination or resignation, Executive will be entitled to the Accrued Obligations and no other amount, except as required by applicable law.
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7.5 Removal from any Boards and Positions. If Executive’s employment is terminated for any reason, Executive shall automatically, without further action, notice or deed, be deemed to resign from any position with any Company Group Member, including, but not limited to, as an officer of any Company Group Member; provided, however, that Executive shall not be deemed to resign or be required to resign from his position as a member of the Board unless Executive is terminated for Cause, in which case Executive shall resign his position as a member of the Board but shall maintain any rights Executive has under the Stockholders Agreement of AirSculpt Technologies, Inc. to be entered into as of the date of the IPO (the “Stockholders Agreement”), including but not limited to the right of Executive to appoint a successor to the Board pursuant to Section 2.1(a)(ii) of the Stockholders Agreement. Notwithstanding the foregoing, this Section 7.5 shall control in the event of conflict with the Stockholders Agreement.
7.6 Release. In order to receive the Severance Payments, Executive must timely execute (and not revoke) a separation agreement and general release (the “Release”) in substantially the form attached hereto as Exhibit A within sixty (60) days of the Termination Date, and (ii) Executive’s non-revocation of such Release. Notwithstanding anything to the contrary contained in this Agreement, (i) Company’s obligations to provide the Severance Payments will immediately cease if Executive is in breach of the Covenant Agreement in any material respect and fails to cure such breach (if curable) within fifteen (15) days after receipt of notice of such breach from the Company, and (ii) in the event that Executive fails to timely cure such breach of the Covenant Agreement, then upon demand by Company, Executive shall immediately repay to Company the amount of any Severance Payments previously paid.
8. Non-contravention. Executive hereby represents to Company that the execution and delivery of this Agreement by Executive and Company and the performance by Executive of Executive’s duties hereunder shall not constitute a breach of, or otherwise contravene, or be prevented, interfered with or hindered by, the terms of any employment agreement or other agreement or policy to which Executive is a party or otherwise bound, and further that Executive is not subject to any limitation on his activities on behalf of the Company Group Member as a result of agreements into which Executive has entered.
9. General Provisions.
9.1 Successors and Assigns. The rights and obligations of Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Company. Executive shall not be entitled to assign any of Executive’s rights or obligations under this Agreement.
9.2 Waiver. Any provision of this Agreement may be waived if, and only if, such waiver is in writing and signed by the party against whom the waiver is to be effective. No failure or delay by any party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege, and no waiver in any one instance shall be effective with respect to any other instance or create a course of dealing.
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9.3 Attorneys’ Fees. Company shall reimburse Executive for legal fees and expenses in connection with the negotiation of this Agreement and other documents related to the IPO and Company structure up to a maximum amount of $100,000.
9.4 Key-Man Insurance. Upon Company’s request, Executive shall cooperate (including, without limitation, taking any required physical examinations) in all respects in obtaining a key-man life and/or long-term disability insurance policy with respect to Executive in which Company (or any subsidiary or affiliate) is named as the beneficiary.
9.5 Legal Counsel. Executive acknowledges and warrants that (i) he has been advised that Executive’s interests may be different from Company’s interests, (ii) he has been afforded a reasonable opportunity to review this Agreement, to understand its terms and to discuss it with an attorney and/or financial advisor of his choice and (iii) he knowingly and voluntarily entered into this Agreement. Company and Executive shall each bear their own costs and expenses in connection with the negotiation and execution of this Agreement.
9.6 Severability. In the event any provision of this Agreement is found to be unenforceable by a court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the parties shall receive the benefits contemplated herein to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of such court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.
9.7 Interpretation; Construction. The headings set forth in this Agreement and the division of this Agreement into sections and subsections are for convenience only and shall not be used in interpreting this Agreement. This Agreement has been drafted by legal counsel representing Company, but Executive has participated in the negotiation of its terms. Furthermore, Executive acknowledges that Executive has reviewed and revised this Agreement and had it reviewed by legal counsel and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.
9.8 Governing Law; Jurisdiction. Any and all actions or controversies arising out of this Agreement, Executive’s employment by Company or the termination thereof, including, without limitation, breach of contract and tort claims, shall be construed and enforced in accordance with the internal laws of the State of Florida, without regard to any choice of law or conflicting provision or rule (whether of the State of Florida or any other jurisdiction) that would cause the laws of any jurisdiction other than the State of Florida to be applied. Any and all actions arising out of this Agreement or Executive’s employment by Company or the termination thereof shall be brought and heard in the state and federal courts located in the Florida, and the parties hereto hereby irrevocably submit to the exclusive jurisdiction of any such courts. COMPANY AND EXECUTIVE HEREBY WAIVE THEIR RESPECTIVE RIGHT TO TRIAL BY JURY IN ANY ACTION CONCERNING THIS AGREEMENT OR ANY AND ALL MATTERS ARISING DIRECTLY OR INDIRECTLY HEREFROM AND REPRESENT THAT THEY HAVE CONSULTED WITH COUNSEL OF THEIR CHOICE SPECIFICALLY WITH RESPECT TO THIS WAIVER.
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9.9 Remedies Cumulative. All remedies provided in this Agreement are cumulative and in addition to all other remedies which may be available at law or in equity.
9.10 Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, faxed, or sent by nationally recognized overnight courier service (with next business day delivery requested), or sent by electronic mail, provided, that the submission by electronic mail is promptly confirmed by telephone confirmation thereof or followed by one of the other foregoing permitted means of notice. Any such notice or communication shall be deemed given and effective, in the case of personal delivery, upon receipt by the other party, in the case of faxed or notice by email, upon transmission of the fax or email, in the case of a courier service, upon the next business day, after dispatch of the notice or communication. Any such notice or communication shall be addressed as follows:
If to Company, to:
AirSculpt Technologies, Inc.
400 Alton Road, Unit TH-103M
Miami
Beach, FL 33129
Attn: Board of Directors
with a copy to:
McDermott
Will & Emery LLP
500 North Capital Street, NW
Washington, DC 20001-1531
Email: tconaghan@mwe.com
Attn: Thomas Conaghan
If to Executive, to him at the offices of Company with a copy to him at his home address as set forth in the records of Company.
9.11 Survival. Notwithstanding anything herein to the contrary, each provision of this Agreement shall survive the termination of this Agreement for any reason or Executive’s ceasing to provide services to Company to the extent necessary to give effect to its terms, including, without limitation, Sections 8, 9, 10, 11, 12, and 13 of this Agreement.
9.12 Counterparts. This Agreement may be executed in any number of counterparts and each such duplicate counterpart shall constitute an original, any one of which may be introduced in evidence or used for any other purpose without the production of its duplicate counterpart. Moreover, notwithstanding that any of the parties did not execute the same counterpart, each counterpart shall be deemed for all purposes to be an original, and all such counterparts shall constitute one and the same instrument, binding on all of the parties hereto.
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9.13 Defend Trade Secrets Act. Executive acknowledges receipt of the following notice under the Defend Trade Secrets Act: An individual will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret if he/she (i) makes such disclosure in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney and such disclosure is made solely for the purpose of reporting or investigating a suspected violation of law; or (ii) such disclosure was made in a complaint or other document filed in a lawsuit or other proceeding if such filing is made under seal.
9.14 Preserved Rights. This Agreement is not intended to, and shall not, in any way prohibit, limit or otherwise interfere with Executive’s protected rights under federal, state or local law to, without notice to Company: (i) communicate or file a charge with a government regulator, (ii) participate in an investigation or proceeding conducted by a government regulator, or (iii) receive an award paid by a government regulator for providing information.
9.15 Cooperation. Subject to Section 9.14, during the Term and thereafter, in the event that any proceeding is commenced by any governmental authority or other person in connection with the business of Company, Executive agrees to cooperate with Company to defend against such proceeding and, if an injunction or other order is issued in any such proceeding, to cooperate with Company in its efforts to have such injunction or other order lifted. If such cooperation is following the end of the Term, then the Company shall reimburse Executive for all reasonable documented out-of-pocket expenses incurred in connection with such cooperation and the Company agrees that such cooperation will not unreasonably interfere with Executive’s duties to a subsequent employer.
10. No Other Contracts. Executive represents and warrants to the Company Group Members that neither the execution and delivery of this Agreement by Executive nor the performance of Executive’s obligations hereunder, shall constitute a default under or a breach of any other agreement or contract to which Executive is a party or by which Executive is bound, nor shall the execution and delivery of this Agreement by Executive nor the performance of Executive’s duties and obligations hereunder give rise to any claim or charge against either Executive or any Company Group Member based upon any other contract, or agreement to which Executive is a party or by which Executive is bound. Executive shall indemnify and hold harmless each Company Group Member against any and all claims that execution and delivery of this Agreement by Executive or Executive’s performance of his obligations hereunder constitutes a default under or a breach of any other agreement or contract to which Executive is a party or by which Executive is bound.
11. Code Section 409A Compliance.
11.1 This Agreement is intended to comply with, or otherwise be exempt from, Section 409A of the Internal Revenue Code of 1986 as amended, and any regulations and Treasury guidance promulgated thereunder (collectively, “Section 409A of the Code”).
11.2 Company and Executive agree that they will execute any and all amendments to this Agreement as they mutually agree in good faith may be necessary to ensure compliance with the provisions of Section 409A of the Code.
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11.3 The preceding provisions, however, shall not be construed as a guarantee by Company of any particular tax effect to Executive under this Agreement. No Company Group Member shall be liable to Executive for any payment made under this Agreement which is determined to result in an additional tax, penalty or interest under Section 409A of the Code, nor for reporting in good faith any payment made under this Agreement as an amount includible in gross income under Section 409A of the Code.
11.4 For purposes of Section 409A of the Code, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.
11.5 With respect to any reimbursement of expenses or any provision of in-kind benefits to Executive specified under this Agreement, such reimbursement of expenses or provision of in-kind benefits shall be subject to the following conditions: (ii) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year, except for any medical reimbursement arrangements providing for the reimbursement of expenses referred to in Section 105(b) of the Code; (ii) the reimbursement of an eligible expense shall be made no later than the end of the year following the year in which such expense was incurred; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
11.6 Notwithstanding anything in this Agreement to the contrary, if a payment obligation arises on account of Executive’s separation from service while Executive is a “specified employee” as described in Section 409A of the Code and the Treasury Regulations thereunder and as determined by Company in accordance with its procedures, by which determination Executive is bound, any payment of “deferred compensation” (as defined under Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12)) shall be made on the first (1st) business day of the seventh (7th) month following the date of Executive’s separation from service, or, if earlier, within fifteen (15) days after the appointment of the personal representative or executor of Executive’s estate following Executive’s death.
12. Section 280G of the Code. In the event that it is determined that any payments or benefits provided under this Agreement, together with any payments or benefits to be provided under any other plan, program, arrangement or agreement, would constitute parachute payments within the meaning of Section 280G of the Internal Revenue Code of 1986 as amended, and any regulations and Treasury guidance promulgated thereunder (collectively, “Section 280G of the Code”) and would, but for this Section 12 be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (the “Excise Tax”), then the amounts of any such payments or benefits under this Agreement and such other arrangements shall be either (a) paid in full or (b) reduced to the minimum extent necessary to ensure that no portion of the payments or benefits is subject to the Excise Tax, whichever of the foregoing (a) or (b) results in the Executive’s receipt on an after-tax basis of the greatest amount of payments and benefits after taking into account the applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax). Company shall cooperate in good faith with the Executive in making such determination, including but not limited to providing the Executive with an estimate of any parachute payments as soon as reasonably practicable prior to an event constituting a change in the ownership or effective control of Company or in the ownership of a substantial portion of the assets of Company (within the meaning of Section 280G(b)(2)(A) of the Code). Any such reduction pursuant to this Section 12 shall be made in a manner that results in the greatest economic benefit for the Executive and is consistent with the requirements of Section 409A of the Code. Any determination required under this Section 12 shall be made in writing in good faith by a nationally recognized public accounting firm selected by Company and paid for by Company. Company and the Executive shall provide the accounting firm with such information and documents as the accounting firm may reasonably request in order to make a determination under this Section 12.
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13. Entire Agreement; Modification. This Agreement and the Covenants Agreement constitute the entire agreement between the parties relating to Executive’s employment by (or service to) Company or any of its subsidiaries and/or affiliates and supersede all prior or simultaneous representations, discussions, negotiations, and agreements, whether written or oral, including, without limitation, illustrative terms of employment and that certain term sheet previously provided to Executive dated September 4, 2018. This Agreement may be amended or modified only with the written consent of Executive and Company. No oral amendment or modification will be effective under any circumstances whatsoever.
THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATES FIRST ABOVE WRITTEN.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of October 5, 2021.
COMPANY | |
EBS Enterprises, LLC | |
By: | /s/ Daniel Sollof | |
Name: Daniel Sollof | ||
Title: Authorized Signatory |
EXECUTIVE | |
/s/ Dr. Aaron Rollins | |
Dr. Aaron Rollins |
Exhibit 10.6
AirSculpt Technologies, Inc.
2021 Equity Incentive Plan
Adopted
by the Board of Directors: [ ], 2021
Approved by the Stockholders: [ ], 2021
1. | General. |
(a) Plan Purpose. The purpose of the Plan is to further align the interests of eligible participants with those of the Company’s stockholders by providing incentive compensation opportunities tied to the performance of the Company and its Common Stock. The Plan is intended to advance the interests of the Company and increase stockholder value by attracting, retaining and motivating key personnel upon whose judgment, initiative and effort the successful conduct of the Company’s business is largely dependent.
(b) Available Awards. The Plan provides for the grant of the following Awards: (i) Incentive Stock Options; (ii) Nonstatutory Stock Options; (iii) SARs; (iv) Restricted Stock Awards; (v) RSU Awards; (vi) Performance Awards; and (vii) Other Awards.
(c) Adoption Date; Effective Date. The Plan will come into existence on the Adoption Date, but no Award may be granted prior to the Effective Date.
2. | Shares Subject to the Plan. |
(a) Share Reserve. Subject to adjustment in accordance with Section 2(c) and any adjustments as necessary to implement any Capitalization Adjustments, the aggregate number of shares of Common Stock that may be issued pursuant to Awards will be [____] shares (the “Initial Share Pool”). In addition, subject to any adjustments as necessary to implement any Capitalization Adjustments, such aggregate number of shares of Common Stock will automatically increase on January 1 of each year for a period of ten years commencing on January 1, 2023 and ending on (and including) January 1, 2032, in an amount equal to the lesser of (i) four percent (4%) of the total number of shares of Common Stock outstanding on December 31 of the preceding year and (ii) such smaller number of shares as determined by the Board.
(b) Aggregate Incentive Stock Option Limit. Notwithstanding anything to the contrary in Section 2(a) and subject to any adjustments as necessary to implement any Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options is [__] shares.
(c) Share Reserve Operation.
(i) Limit Applies to Common Stock Issued Pursuant to Awards. For clarity, the Share Reserve is a limit on the number of shares of Common Stock that may be issued pursuant to Awards and does not limit the granting of Awards, except that the Company will keep available at all times the number of shares of Common Stock reasonably required to satisfy its obligations to issue shares pursuant to such Awards. Shares may be issued in connection with a merger or acquisition as permitted by, as applicable, Nasdaq Listing Rule 5635(c), NYSE Listed Company Manual Section 303A.08, NYSE American Company Guide Section 711 or other applicable rule, and such issuance will not reduce the number of shares available for issuance under the Plan.
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(ii) Actions that Do Not Constitute Issuance of Common Stock and Do Not Reduce Share Reserve. The following actions do not result in an issuance of shares under the Plan and accordingly do not reduce the number of shares subject to the Share Reserve and available for issuance under the Plan: (1) the expiration or termination of any portion of an Award without the shares covered by such portion of the Award having been issued; (2) the settlement of any portion of an Award in cash (i.e., the Participant receives cash rather than Common Stock); (3) the withholding of shares that would otherwise be issued by the Company to satisfy the exercise, strike or purchase price of an Award; or (4) the withholding of shares that would otherwise be issued by the Company to satisfy a tax withholding obligation in connection with an Award.
(iii) Reversion of Previously Issued Shares of Common Stock to Share Reserve. The following shares of Common Stock previously issued pursuant to an Award and accordingly initially deducted from the Share Reserve will be added back to the Share Reserve and again become available for issuance under the Plan: (1) any shares that are forfeited back to or repurchased by the Company because of a failure to meet a contingency or condition required for the vesting of such shares; (2) any shares that are reacquired by the Company to satisfy the exercise, strike or purchase price of an Award; and (3) any shares that are reacquired by the Company to satisfy a tax withholding obligation in connection with an Award.
3. | Eligibility and Limitations. |
(a) Eligible Award Recipients. Subject to the terms of the Plan, Employees, Directors and Consultants are eligible to receive Awards.
(b) Specific Award Limitations.
(i) Limitations on Incentive Stock Option Recipients. Incentive Stock Options may be granted only to Employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and (f) of the Code).
(ii) Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and any Affiliates) exceeds $100,000 (or such other limit established in the Code) or otherwise does not comply with the rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the order in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s).
(iii) Limitations on Incentive Stock Options Granted to Ten Percent Stockholders. A Ten Percent Stockholder may not be granted an Incentive Stock Option unless (1) the exercise price of such Option is at least 110% of the Fair Market Value on the date of grant of such Option and (2) the Option is not exercisable after the expiration of five years from the date of grant of such Option.
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(iv) Limitations on Nonstatutory Stock Options and SARs. Nonstatutory Stock Options and SARs may not be granted to Employees, Directors and Consultants unless the stock underlying such Awards is treated as “service recipient stock” under Section 409A or unless such Awards otherwise comply with the requirements of Section 409A.
(c) Aggregate Incentive Stock Option Limit. The aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options is the number of shares specified in Section 2(b).
(d) Non-Employee Director Compensation Limit. The aggregate value of all compensation granted or paid, as applicable, to any individual for service as a Non-Employee Director with respect to any calendar year, including Awards granted and cash fees paid by the Company to such Non-Employee Director, will not exceed $750,000 in total value calculating the value of any equity awards based on the grant date fair value of such equity awards for financial reporting purposes. The limitations in this Section 3(d) shall apply commencing with the first calendar year that begins following the Effective Date.
4. | Options and Stock Appreciation Rights. |
Each Option and SAR will have such terms and conditions as determined by the Board. Each Option will be designated in writing as an Incentive Stock Option or Nonstatutory Stock Option at the time of grant; provided, however, that if an Option is not so designated or if an Option designated as an Incentive Stock Option fails to qualify as an Incentive Stock Option, then such Option will be a Nonstatutory Stock Option, and the shares purchased upon exercise of each type of Option will be separately accounted for. Each SAR will be denominated in shares of Common Stock equivalents. The terms and conditions of separate Options and SARs need not be identical; provided, however, that each Option Agreement and SAR Agreement will conform (through incorporation of provisions hereof by reference in the Award Agreement or otherwise) to the substance of each of the following provisions:
(a) Term. Subject to Section 3(b) regarding Ten Percent Stockholders, no Option or SAR will be exercisable after the expiration of ten years from the date of grant of such Award or such shorter period specified in the Award Agreement.
(b) Exercise or Strike Price. Subject to Section 3(b) regarding Ten Percent Stockholders, the exercise or strike price of each Option or SAR will not be less than 100% of the Fair Market Value on the date of grant of such Award. Notwithstanding the foregoing, an Option or SAR may be granted with an exercise or strike price lower than 100% of the Fair Market Value on the date of grant of such Award if such Award is granted pursuant to an assumption of or substitution for another option or stock appreciation right pursuant to a Corporate Transaction and in a manner consistent with the provisions of Sections 409A and, if applicable, 424(a) of the Code.
(c) Exercise Procedure and Payment of Exercise Price for Options. In order to exercise an Option, the Participant must provide notice of exercise to the Plan Administrator in accordance with the procedures specified in the Option Agreement or otherwise provided by the Company. The Board has the authority to grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to utilize a particular method of payment. The exercise price of an Option may be paid, to the extent permitted by Applicable Law and as determined by the Board, by one or more of the following methods of payment to the extent set forth in the Option Agreement:
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(i) by cash or check, bank draft or money order payable to the Company;
(ii) pursuant to a “cashless exercise” program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the Common Stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the exercise price to the Company from the sales proceeds;
(iii) by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock that are already owned by the Participant free and clear of any liens, claims, encumbrances or security interests, with a Fair Market Value on the date of exercise that does not exceed the exercise price, provided that (1) at the time of exercise the Common Stock is publicly traded, (2) any remaining balance of the exercise price not satisfied by such delivery is paid by the Participant in cash or other permitted form of payment, (3) such delivery would not violate any Applicable Law or agreement restricting the redemption of the Common Stock, (4) any certificated shares are endorsed or accompanied by an executed assignment separate from certificate, and (5) such shares have been held by the Participant for any minimum period necessary to avoid adverse accounting treatment as a result of such delivery;
(iv) if the Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value on the date of exercise that does not exceed the exercise price, provided that (1) such shares used to pay the exercise price will not be exercisable thereafter and (2) any remaining balance of the exercise price not satisfied by such net exercise is paid by the Participant in cash or other permitted form of payment; or
(v) in any other form of consideration that may be acceptable to the Board and permissible under Applicable Law.
(d) Exercise Procedure and Payment of Appreciation Distribution for SARs. In order to exercise any SAR, the Participant must provide notice of exercise to the Plan Administrator in accordance with the SAR Agreement. The appreciation distribution payable to a Participant upon the exercise of a SAR will not be greater than an amount equal to the excess of (i) the aggregate Fair Market Value on the date of exercise of a number of shares of Common Stock equal to the number of Common Stock equivalents that are vested and being exercised under such SAR, over (ii) the strike price of such SAR. Such appreciation distribution may be paid to the Participant in the form of Common Stock or cash (or any combination of Common Stock and cash) or in any other form of payment, as determined by the Board and specified in the SAR Agreement.
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(e) Transferability. Options and SARs may not be transferred to third party financial institutions for value. The Board may impose such additional limitations on the transferability of an Option or SAR as it determines. In the absence of any such determination by the Board, the following restrictions on the transferability of Options and SARs will apply, provided that except as explicitly provided herein, neither an Option nor a SAR may be transferred for consideration and provided, further, that if an Option is an Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer:
(i) Restrictions on Transfer. An Option or SAR will not be transferable, except by will or by the laws of descent and distribution, and will be exercisable during the lifetime of the Participant only by the Participant; provided, however, that the Board may permit transfer of an Option or SAR in a manner that is not prohibited by applicable tax and securities laws upon the Participant’s request, including to a trust if the Participant is considered to be the sole beneficial owner of such trust (as determined under Section 671 of the Code and applicable state law) while such Option or SAR is held in such trust, provided that the Participant and the trustee enter into a transfer and other agreements required by the Company.
(ii) Domestic Relations Orders. Notwithstanding the foregoing, subject to the execution of transfer documentation in a format acceptable to the Company and subject to the approval of the Board or a duly authorized Officer, an Option or SAR may be transferred pursuant to a domestic relations order.
(f) Vesting. The Board may impose such restrictions on or conditions to the vesting and/or exercisability of an Option or SAR as determined by the Board. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, vesting of Options and SARs will cease upon termination of the Participant’s Continuous Service.
(g) Termination of Continuous Service for Cause. Except as explicitly otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service is terminated for Cause, the Participant’s Options and SARs will terminate and be forfeited immediately upon such termination of Continuous Service, and the Participant will be prohibited from exercising any portion (including any vested portion) of such Awards on and after the date of such termination of Continuous Service and the Participant will have no further right, title or interest in such forfeited Award, the shares of Common Stock subject to the forfeited Award, or any consideration in respect of the forfeited Award.
(h) Post-Termination Exercise Period Following Termination of Continuous Service for Reasons Other than Cause. Subject to Section 4(i), if a Participant’s Continuous Service terminates for any reason other than for Cause, the Participant may exercise his or her Option or SAR to the extent vested, but only within the following period of time or, if applicable, such other period of time provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate; provided, however, that in no event may such Award be exercised after the expiration of its maximum term (as set forth in Section 4(a)):
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(i) three months following the date of such termination if such termination is a termination without Cause (other than any termination due to the Participant’s Disability or death);
(ii) 12 months following the date of such termination if such termination is due to the Participant’s Disability;
(iii) 18 months following the date of such termination if such termination is due to the Participant’s death; or
(iv) 18 months following the date of the Participant’s death if such death occurs following the date of such termination but during the period such Award is otherwise exercisable (as provided in (i) or (ii) above).
Following the date of such termination, to the extent the Participant does not exercise such Award within the applicable Post-Termination Exercise Period (or, if earlier, prior to the expiration of the maximum term of such Award), such unexercised portion of the Award will terminate, and the Participant will have no further right, title or interest in the terminated Award, the shares of Common Stock subject to the terminated Award, or any consideration in respect of the terminated Award.
(i) Restrictions on Exercise; Extension of Exercisability. A Participant may not exercise an Option or SAR at any time that the issuance of shares of Common Stock upon such exercise would violate Applicable Law. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service terminates for any reason other than for Cause and, at any time during the last thirty days of the applicable Post-Termination Exercise Period: (i) the exercise of the Participant’s Option or SAR would be prohibited solely because the issuance of shares of Common Stock upon such exercise would violate Applicable Law, or (ii) the immediate sale of any shares of Common Stock issued upon such exercise would violate the Company’s Trading Policy, then the applicable Post-Termination Exercise Period will be extended to the last day of the calendar month that commences following the date the Award would otherwise expire, with an additional extension of the exercise period to the last day of the next calendar month to apply if any of the foregoing restrictions apply at any time during such extended exercise period, generally without limitation as to the maximum permitted number of extensions); provided, however, that in no event may such Award be exercised after the expiration of its maximum term (as set forth in Section 4(a)).
(j) Non-Exempt Employees. No Option or SAR, whether or not vested, granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, will be first exercisable for any shares of Common Stock until at least six months following the date of grant of such Award. Notwithstanding the foregoing, in accordance with the provisions of the Worker Economic Opportunity Act, any vested portion of such Award may be exercised earlier than six months following the date of grant of such Award in the event of (i) such Participant’s death or Disability, (ii) a Corporate Transaction in which such Award is not assumed, continued or substituted, (iii) a Change in Control, or (iv) such Participant’s retirement (as such term may be defined in the Award Agreement or another applicable agreement or, in the absence of any such definition, in accordance with the Company’s then current employment policies and guidelines). This Section 4(j) is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option or SAR will be exempt from his or her regular rate of pay.
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(k) Whole Shares. Options and SARs may be exercised only with respect to whole shares of Common Stock or their equivalents.
5. Awards Other Than Options and Stock Appreciation Rights.
(a) Restricted Stock Awards and RSU Awards. Each Restricted Stock Award and RSU Award will have such terms and conditions as determined by the Board; provided, however, that each Restricted Stock Award Agreement and RSU Award Agreement will conform (through incorporation of the provisions hereof by reference in the Award Agreement or otherwise) to the substance of each of the following provisions:
(i) Form of Award.
(1) Restricted Stock Awards: To the extent consistent with the Company’s Bylaws, at the Board’s election, shares of Common Stock subject to a Restricted Stock Award may be (A) held in book entry form subject to the Company’s instructions until such shares become vested or any other restrictions lapse, or (B) evidenced by a certificate, which certificate will be held in such form and manner as determined by the Board. Unless otherwise determined by the Board, a Participant will have voting and other rights as a stockholder of the Company with respect to any shares subject to a Restricted Stock Award.
(2) RSU Awards: An RSU Award represents a Participant’s right to be issued on a future date the number of shares of Common Stock that is equal to the number of restricted stock units subject to the RSU Award. As a holder of an RSU Award, a Participant is an unsecured creditor of the Company with respect to the Company's unfunded obligation, if any, to issue shares of Common Stock in settlement of such Award and nothing contained in the Plan or any RSU Agreement, and no action taken pursuant to its provisions, will create or be construed to create a trust of any kind or a fiduciary relationship between a Participant and the Company or an Affiliate or any other person. A Participant will not have voting or any other rights as a stockholder of the Company with respect to any RSU Award (unless and until shares are actually issued in settlement of a vested RSU Award).
(ii) Consideration.
(1) Restricted Stock Awards: A Restricted Stock Award may be granted in consideration for (A) cash or check, bank draft or money order payable to the Company, (B) services to the Company or an Affiliate, or (C) any other form of consideration as the Board may determine and permissible under Applicable Law.
(2) RSU Awards: Unless otherwise determined by the Board at the time of grant, an RSU Award will be granted in consideration for the Participant’s services to the Company or an Affiliate, such that the Participant will not be required to make any payment to the Company (other than such services) with respect to the grant or vesting of the RSU Award, or the issuance of any shares of Common Stock pursuant to the RSU Award. If, at the time of grant, the Board determines that any consideration must be paid by the Participant (in a form other than the Participant’s services to the Company or an Affiliate) upon the issuance of any shares of Common Stock in settlement of the RSU Award, such consideration may be paid in any form of consideration as the Board may determine and permissible under Applicable Law.
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(iii) Vesting. The Board may impose such restrictions on or conditions to the vesting of a Restricted Stock Award or RSU Award as determined by the Board. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, vesting of Restricted Stock Awards and RSU Awards will cease upon termination of the Participant’s Continuous Service.
(iv) Termination of Continuous Service. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service terminates for any reason, (1) the Company may receive through a forfeiture condition or a repurchase right any or all of the shares of Common Stock held by the Participant under his or her Restricted Stock Award that have not vested as of the date of such termination as set forth in the Restricted Stock Award Agreement and the Participant will have no further right, title or interest in the Restricted Stock Award, the shares of Common Stock subject to the Restricted Stock Award, or any consideration in respect of the Restricted Stock Award and (2) any portion of his or her RSU Award that has not vested will be forfeited upon such termination and the Participant will have no further right, title or interest in the RSU Award, the shares of Common Stock issuable pursuant to the RSU Award, or any consideration in respect of the RSU Award.
(v) Dividends and Dividend Equivalents. Dividends or dividend equivalents may be paid or credited, as applicable, with respect to any shares of Common Stock subject to a Restricted Stock Award or RSU Award, as determined by the Board and specified in the Award Agreement.
(vi) Settlement of RSU Awards. An RSU Award may be settled by the issuance of shares of Common Stock or cash (or any combination thereof) or in any other form of payment, as determined by the Board and specified in the RSU Award Agreement. At the time of grant, the Board may determine to impose such restrictions or conditions that delay such delivery to a date following the vesting of the RSU Award.
(b) Performance Awards. With respect to any Performance Award, the length of any Performance Period, the Performance Goals to be achieved during the Performance Period, the other terms and conditions of such Award, and the measure of whether and to what degree such Performance Goals have been attained will be determined by the Board.
(c) Other Awards. Other forms of Awards valued in whole or in part by reference to, or otherwise based on, Common Stock, including the appreciation in value thereof, may be granted either alone or in addition to Awards provided for under Section 4 and the preceding provisions of this Section 5. Subject to the provisions of the Plan, the Board will have sole and complete discretion to determine the persons to whom and the time or times at which such Other Awards will be granted, the number of shares of Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Awards and all other terms and conditions of such Other Awards.
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6. | Adjustments upon Changes in Common Stock; Other Corporate Events. |
(a) Capitalization Adjustments. In the event of a Capitalization Adjustment, the Board shall appropriately and proportionately adjust: (i) the class(es) and maximum number of shares of Common Stock subject to the Plan and the maximum number of shares by which the Share Reserve may annually increase pursuant to Section 2(a); (ii) the class(es) and maximum number of shares that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 2(b); and (iii) the class(es) and number of securities and exercise price, strike price or purchase price of Common Stock subject to outstanding Awards. The Board shall make such adjustments, and its determination shall be final, binding and conclusive. Notwithstanding the foregoing, no fractional shares or rights for fractional shares of Common Stock shall be created in order to implement any Capitalization Adjustment. The Board shall determine an appropriate equivalent benefit, if any, for any fractional shares or rights to fractional shares that might be created by the adjustments referred to in the preceding provisions of this Section.
(b) Dissolution or Liquidation. Except as otherwise provided in the Award Agreement, in the event of a dissolution or liquidation of the Company, all outstanding Awards (other than Awards consisting of vested and outstanding shares of Common Stock not subject to a forfeiture condition or the Company’s right of repurchase) will terminate immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to the Company’s repurchase rights or subject to a forfeiture condition may be repurchased or reacquired by the Company notwithstanding the fact that the holder of such Award is providing Continuous Service, provided, however, that the Board may determine to cause some or all Awards to become fully vested, exercisable and/or no longer subject to repurchase or forfeiture (to the extent such Awards have not previously expired or terminated) before the dissolution or liquidation is completed but contingent on its completion.
(c) Corporate Transaction. The following provisions will apply to Awards in the event of a Corporate Transaction, except as set forth in Section 11, unless otherwise provided in the instrument evidencing the Award or any other written agreement between the Company or any Affiliate and the Participant or unless otherwise expressly provided by the Board at the time of grant of an Award.
(i) Awards May Be Assumed. In the event of a Corporate Transaction, any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue any or all Awards outstanding under the Plan or may substitute similar awards for Awards outstanding under the Plan (including but not limited to, awards to acquire the same consideration paid to the stockholders of the Company pursuant to the Corporate Transaction), and any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to Awards may be assigned by the Company to the successor of the Company (or the successor’s parent company, if any), in connection with such Corporate Transaction. A surviving corporation or acquiring corporation (or its parent) may choose to assume or continue only a portion of an Award or substitute a similar award for only a portion of an Award, or may choose to assume or continue the Awards held by some, but not all Participants. The terms of any assumption, continuation or substitution will be set by the Board.
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(ii) Awards Held by Current Participants. In the event of a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue such outstanding Awards or substitute similar awards for such outstanding Awards, then with respect to Awards that have not been assumed, continued or substituted and that are held by Participants whose Continuous Service has not terminated prior to the effective time of the Corporate Transaction (referred to as the “Current Participants”), the vesting of such Awards (and, with respect to Options and Stock Appreciation Rights, the time when such Awards may be exercised) will be accelerated in full to a date prior to the effective time of such Corporate Transaction (contingent upon the effectiveness of the Corporate Transaction) as the Board determines (or, if the Board does not determine such a date, to the date that is five days prior to the effective time of the Corporate Transaction), and such Awards will terminate if not exercised (if applicable) at or prior to the effective time of the Corporate Transaction, and any reacquisition or repurchase rights held by the Company with respect to such Awards will lapse (contingent upon the effectiveness of the Corporate Transaction). With respect to the vesting of Performance Awards that will accelerate upon the occurrence of a Corporate Transaction pursuant to this subsection (ii) and that have multiple vesting levels depending on the level of performance, unless otherwise provided in the Award Agreement, the vesting of such Performance Awards will accelerate at 100% of the target level upon the occurrence of the Corporate Transaction in which the Awards are not assumed, continued or substituted in accordance with Section 6(c)(i). With respect to the vesting of Awards that will accelerate upon the occurrence of a Corporate Transaction pursuant to this subsection (ii) and are settled in the form of a cash payment, such cash payment will be made no later than 30 days following the occurrence of the Corporate Transaction or such later date as required to comply with Section 409A of the Code.
(iii) Awards Held by Persons other than Current Participants. In the event of a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue such outstanding Awards or substitute similar awards for such outstanding Awards, then with respect to Awards that have not been assumed, continued or substituted and that are held by persons other than Current Participants, such Awards will terminate if not exercised (if applicable) prior to the occurrence of the Corporate Transaction; provided, however, that any reacquisition or repurchase rights held by the Company with respect to such Awards will not terminate and may continue to be exercised notwithstanding the Corporate Transaction.
(iv) Payment for Awards in Lieu of Exercise. Notwithstanding the foregoing, in the event an Award will terminate if not exercised prior to the effective time of a Corporate Transaction, the Board may provide, in its sole discretion, that the holder of such Award may not exercise such Award but will receive a payment, in such form as may be determined by the Board, equal in value, at the effective time, to the excess, if any, of (1) the value of the property the Participant would have received upon the exercise of the Award (including, at the discretion of the Board, any unvested portion of such Award), over (2) any exercise price payable by such holder in connection with such exercise.
(d) Appointment of Stockholder Representative. As a condition to the receipt of an Award under this Plan, a Participant will be deemed to have agreed that the Award will be subject to the terms of any agreement governing a Corporate Transaction involving the Company, including, without limitation, a provision for the appointment of a stockholder representative that is authorized to act on the Participant’s behalf with respect to any escrow, indemnities and any contingent consideration.
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(e) No Restriction on Right to Undertake Transactions. The grant of any Award under the Plan and the issuance of shares pursuant to any Award does not affect or restrict in any way the right or power of the Company or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, rights or options to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
7. | Administration. |
(a) Administration by Board. The Board will administer the Plan unless and until the Board delegates administration of the Plan to a Committee or Committees, as provided in subsection (c) below.
(b) Powers of Board. The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan:
(i) To determine from time to time (1) which of the persons eligible under the Plan will be granted Awards; (2) when and how each Award will be granted; (3) what type or combination of types of Award will be granted; (4) the provisions of each Award granted (which need not be identical), including the time or times when a person will be permitted to receive an issuance of Common Stock or other payment pursuant to an Award; (5) the number of shares of Common Stock or cash equivalent with respect to which an Award will be granted to each such person; (6) the Fair Market Value applicable to an Award; and (7) the terms of any Performance Award that is not valued in whole or in part by reference to, or otherwise based on, the Common Stock, including the amount of cash payment or other property that may be earned and the timing of payment.
(ii) To construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Award Agreement, in a manner and to the extent it deems necessary or expedient to make the Plan or Award fully effective.
(iii) To settle all controversies regarding the Plan and Awards granted under it.
(iv) To accelerate the time at which an Award may first be exercised or the time during which an Award or any part thereof will vest, notwithstanding the provisions in the Award Agreement stating the time at which it may first be exercised or the time during which it will vest.
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(v) To prohibit the exercise of any Option, SAR or other exercisable Award during a period of up to 30 days prior to the consummation of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the shares of Common Stock or the share price of the Common Stock including any Corporate Transaction, for reasons of administrative convenience.
(vi) To suspend or terminate the Plan at any time. Suspension or termination of the Plan will not Materially Impair rights and obligations under any Award granted while the Plan is in effect except with the written consent of the affected Participant.
(vii) To amend the Plan in any respect the Board deems necessary or advisable; provided, however, that stockholder approval will be required for any amendment to the extent required by Applicable Law. Except as provided above, rights under any Award granted before amendment of the Plan will not be Materially Impaired by any amendment of the Plan unless (1) the Company requests the consent of the affected Participant, and (2) such Participant consents in writing.
(viii) To submit any amendment to the Plan for stockholder approval.
(ix) To approve forms of Award Agreements for use under the Plan and to amend the terms of any one or more Awards, including, but not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Award Agreement, subject to any specified limits in the Plan that are not subject to Board discretion; provided however, that, a Participant’s rights under any Award will not be Materially Impaired by any such amendment unless (1) the Company requests the consent of the affected Participant, and (2) such Participant consents in writing.
(x) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan or Awards.
(xi) To adopt such procedures and sub-plans as are necessary or appropriate to permit and facilitate participation in the Plan by, or take advantage of specific tax treatment for Awards granted to, Employees, Directors or Consultants who are foreign nationals or employed outside the United States (provided that Board approval will not be necessary for immaterial modifications to the Plan or any Award Agreement to ensure or facilitate compliance with the laws of the relevant foreign jurisdiction).
(xii) To effect, at any time and from time to time, subject to the consent of any Participant whose Award is Materially Impaired by such action, (1) the reduction of the exercise price (or strike price) of any outstanding Option or SAR; (2) the cancellation of any outstanding Option or SAR and the grant in substitution therefor of (A) a new Option, SAR, Restricted Stock Award, RSU Award or Other Award, under the Plan or another equity plan of the Company, covering the same or a different number of shares of Common Stock, (B) cash and/or (C) other valuable consideration (as determined by the Board); or (3) any other action that is treated as a repricing under generally accepted accounting principles.
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(c) Delegation to Committee.
(i) General. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration of the Plan is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to another Committee or a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. Each Committee may retain the authority to concurrently administer the Plan with Committee or subcommittee to which it has delegated its authority hereunder and may, at any time, revest in such Committee some or all of the powers previously delegated. The Board may retain the authority to concurrently administer the Plan with any Committee and may, at any time, revest in the Board some or all of the powers previously delegated.
(ii) Rule 16b-3 Compliance. To the extent an Award is intended to qualify for the exemption from Section 16(b) of the Exchange Act that is available under Rule 16b-3 of the Exchange Act, the Award will be granted by the Board or a Committee that consists solely of two or more Non-Employee Directors, as determined under Rule 16b-3(b)(3) of the Exchange Act and thereafter any action establishing or modifying the terms of the Award will be approved by the Board or a Committee meeting such requirements to the extent necessary for such exemption to remain available.
(d) Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board or any Committee in good faith will not be subject to review by any person and will be final, binding and conclusive on all persons.
(e) Delegation to an Officer. The Board or any Committee may delegate to one or more Officers the authority to do one or both of the following (i) designate Employees who are not Officers to be recipients of Options and SARs (and, to the extent permitted by Applicable Law, other types of Awards) and, to the extent permitted by Applicable Law, the terms thereof, and (ii) determine the number of shares of Common Stock to be subject to such Awards granted to such Employees; provided, however, that the resolutions or charter adopted by the Board or any Committee evidencing such delegation will specify the total number of shares of Common Stock that may be subject to the Awards granted by such Officer and that such Officer may not grant an Award to himself or herself. Any such Awards will be granted on the applicable form of Award Agreement most recently approved for use by the Board or the Committee, unless otherwise provided in the resolutions approving the delegation authority. Notwithstanding anything to the contrary herein, neither the Board nor any Committee may delegate to an Officer who is acting solely in the capacity of an Officer (and not also as a Director) the authority to determine the Fair Market Value.
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8. | Tax Withholding |
(a) Withholding Authorization. As a condition to acceptance of any Award under the Plan, a Participant authorizes withholding from payroll and any other amounts payable to such Participant, and otherwise agrees to make adequate provision for (including), any sums required to satisfy any U.S. federal, state, local and/or foreign tax or social insurance contribution withholding obligations of the Company or an Affiliate, if any, which arise in connection with the exercise, vesting or settlement of such Award, as applicable. Accordingly, a Participant may not be able to exercise an Award even though the Award is vested, and the Company shall have no obligation to issue shares of Common Stock subject to an Award, unless and until such obligations are satisfied.
(b) Satisfaction of Withholding Obligation. To the extent permitted by the terms of an Award Agreement, the Company may, in its sole discretion, satisfy any U.S. federal, state, local and/or foreign tax or social insurance withholding obligation relating to an Award by any of the following means or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Award; (iii) withholding cash from an Award settled in cash; (iv) withholding payment from any amounts otherwise payable to the Participant; (v) by allowing a Participant to effectuate a “cashless exercise” pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board; or (vi) by such other method as may be set forth in the Award Agreement.
(c) No Obligation to Notify or Minimize Taxes; No Liability to Claims. Except as required by Applicable Law the Company has no duty or obligation to any Participant to advise such holder as to the time or manner of exercising such Award. Furthermore, the Company has no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of an Award or a possible period in which the Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences of an Award to the holder of such Award and will not be liable to any holder of an Award for any adverse tax consequences to such holder in connection with an Award. As a condition to accepting an Award under the Plan, each Participant (i) agrees to not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from such Award or other Company compensation and (ii) acknowledges that such Participant was advised to consult with his or her own personal tax, financial and other legal advisors regarding the tax consequences of the Award and has either done so or knowingly and voluntarily declined to do so. Additionally, each Participant acknowledges any Option or SAR granted under the Plan is exempt from Section 409A only if the exercise or strike price is at least equal to the “fair market value” of the Common Stock on the date of grant as determined by the Internal Revenue Service and there is no other impermissible deferral of compensation associated with the Award. Additionally, as a condition to accepting an Option or SAR granted under the Plan, each Participant agrees not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates in the event that the Internal Revenue Service asserts that such exercise price or strike price is less than the “fair market value” of the Common Stock on the date of grant as subsequently determined by the Internal Revenue Service.
(d) Withholding Indemnification. As a condition to accepting an Award under the Plan, in the event that the amount of the Company’s and/or its Affiliate’s withholding obligation in connection with such Award was greater than the amount actually withheld by the Company and/or its Affiliates, each Participant agrees to indemnify and hold the Company and/or its Affiliates harmless from any failure by the Company and/or its Affiliates to withhold the proper amount.
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9. | Miscellaneous. |
(a) Source of Shares. The stock issuable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market or otherwise.
(b) Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common Stock pursuant to Awards will constitute general funds of the Company.
(c) Corporate Action Constituting Grant of Awards. Corporate action constituting a grant by the Company of an Award to any Participant will be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Award is communicated to, or actually received or accepted by, the Participant. In the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action approving the grant contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Award Agreement or related grant documents as a result of a clerical error in the Award Agreement or related grant documents, the corporate records will control and the Participant will have no legally binding right to the incorrect term in the Award Agreement or related grant documents.
(d) Stockholder Rights. No Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Award unless and until (i) such Participant has satisfied all requirements for exercise of the Award pursuant to its terms, if applicable, and (ii) the issuance of the Common Stock subject to such Award is reflected in the records of the Company.
(e) No Employment or Other Service Rights. Nothing in the Plan, any Award Agreement or any other instrument executed thereunder or in connection with any Award granted pursuant thereto will confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or affect the right of the Company or an Affiliate to terminate at will and without regard to any future vesting opportunity that a Participant may have with respect to any Award (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state or foreign jurisdiction in which the Company or the Affiliate is incorporated, as the case may be. Further, nothing in the Plan, any Award Agreement or any other instrument executed thereunder or in connection with any Award will constitute any promise or commitment by the Company or an Affiliate regarding the fact or nature of future positions, future work assignments, future compensation or any other term or condition of employment or service or confer any right or benefit under the Award or the Plan unless such right or benefit has specifically accrued under the terms of the Award Agreement and/or Plan.
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(f) Change in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or her services for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is an Employee of the Company and the Employee has a change in status from a full-time Employee to a part-time Employee or takes an extended leave of absence) after the date of grant of any Award to the Participant, the Board may determine, to the extent permitted by Applicable Law, to (i) make a corresponding reduction in the number of shares or cash amount subject to any portion of such Award that is scheduled to vest or become payable after the date of such change in time commitment, and (ii) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Award. In the event of any such reduction, the Participant will have no right with respect to any portion of the Award that is so reduced or extended.
(g) Execution of Additional Documents. As a condition to accepting an Award under the Plan, the Participant agrees to execute any additional documents or instruments necessary or desirable, as determined in the Plan Administrator’s sole discretion, to carry out the purposes or intent of the Award, or facilitate compliance with securities and/or other regulatory requirements, in each case at the Plan Administrator’s request.
(h) Electronic Delivery and Participation. Any reference herein or in an Award Agreement to a “written” agreement or document will include any agreement or document delivered electronically, filed publicly at www.sec.gov (or any successor website thereto) or posted on the Company’s intranet (or other shared electronic medium controlled by the Company to which the Participant has access). By accepting any Award the Participant consents to receive documents by electronic delivery and to participate in the Plan through any on-line electronic system established and maintained by the Plan Administrator or another third party selected by the Plan Administrator. The form of delivery of any Common Stock (e.g., a stock certificate or electronic entry evidencing such shares) shall be determined by the Company.
(i) Clawback/Recovery. All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other Applicable Law and any clawback policy that the Company otherwise adopts, to the extent applicable and permissible under Applicable Law. In addition, the Board may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Board determines necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired shares of Common Stock or other cash or property upon the occurrence of Cause. No recovery of compensation under such a clawback policy will be an event giving rise to a Participant’s right to voluntarily terminate employment upon a “resignation for good reason,” or for a “constructive termination” or any similar term under any plan of or agreement with the Company.
(j) Securities Law Compliance. A Participant will not be issued any shares in respect of an Award unless either (i) the shares are registered under the Securities Act; or (ii) the Company has determined that such issuance would be exempt from the registration requirements of the Securities Act. Each Award also must comply with other Applicable Law governing the Award, and a Participant will not receive such shares if the Company determines that such receipt would not be in material compliance with Applicable Law.
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(k) Transfer or Assignment of Awards; Issued Shares. Except as expressly provided in the Plan or the form of Award Agreement, Awards granted under the Plan may not be transferred or assigned by the Participant. After the vested shares subject to an Award have been issued, or in the case of Restricted Stock and similar awards, after the issued shares have vested, the holder of such shares is free to assign, hypothecate, donate, encumber or otherwise dispose of any interest in such shares provided that any such actions are in compliance with the provisions herein, the terms of the Trading Policy and Applicable Law.
(l) Effect on Other Employee Benefit Plans. The value of any Award granted under the Plan, as determined upon grant, vesting or settlement, shall not be included as compensation, earnings, salaries, or other similar terms used when calculating any Participant’s benefits under any employee benefit plan sponsored by the Company or any Affiliate, except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any of the Company's or any Affiliate's employee benefit plans.
(m) Deferrals. To the extent permitted by Applicable Law, the Board, in its sole discretion, may determine that the delivery of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Award may be deferred and may also establish programs and procedures for deferral elections to be made by Participants. Deferrals will be made in accordance with the requirements of Section 409A.
(n) Section 409A. Unless otherwise expressly provided for in an Award Agreement, the Plan and Award Agreements will be interpreted to the greatest extent possible in a manner that makes the Plan and the Awards granted hereunder exempt from Section 409A, and, to the extent not so exempt, in compliance with the requirements of Section 409A. If the Board determines that any Award granted hereunder is not exempt from and is therefore subject to Section 409A, the Award Agreement evidencing such Award will incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code, and to the extent an Award Agreement is silent on terms necessary for compliance, such terms are hereby incorporated by reference into the Award Agreement. Notwithstanding anything to the contrary in this Plan (and unless the Award Agreement specifically provides otherwise), if the shares of Common Stock are publicly traded, and if a Participant holding an Award that constitutes “deferred compensation” under Section 409A is a “specified employee” for purposes of Section 409A, no distribution or payment of any amount that is due because of a “separation from service” (as defined in Section 409A without regard to alternative definitions thereunder) will be issued or paid before the date that is six months and one day following the date of such Participant’s “separation from service” or, if earlier, the date of the Participant’s death, unless such distribution or payment can be made in a manner that complies with Section 409A, and any amounts so deferred will be paid in a lump sum on the day after such six month period elapses, with the balance paid thereafter on the original schedule.
(o) Choice of Law. This Plan and any controversy arising out of or relating to this Plan shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to conflict of law principles that would result in any application of any law other than the law of the State of Delaware.
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10. | Covenants of the Company. |
The Company will seek to obtain from each regulatory commission or agency, as may be deemed to be necessary, having jurisdiction over the Plan such authority as may be required to grant Awards and to issue and sell shares of Common Stock upon exercise or vesting of the Awards; provided, however, that this undertaking will not require the Company to register under the Securities Act the Plan, any Award or any Common Stock issued or issuable pursuant to any such Award. If, after reasonable efforts and at a reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary or advisable for the lawful issuance and sale of Common Stock under the Plan, the Company will be relieved from any liability for failure to issue and sell Common Stock upon exercise or vesting of such Awards unless and until such authority is obtained. A Participant is not eligible for the grant of an Award or the subsequent issuance of Common Stock pursuant to the Award if such grant or issuance would be in violation of any Applicable Law.
11. | Additional Rules for Awards Subject to Section 409A. |
(a) Application. Unless the provisions of this Section of the Plan are expressly superseded by the provisions in the form of Award Agreement, the provisions of this Section shall apply and shall supersede anything to the contrary set forth in the Award Agreement for a Non-Exempt Award.
(b) Non-Exempt Awards Subject to Non-Exempt Severance Arrangements. To the extent a Non-Exempt Award is subject to Section 409A due to application of a Non-Exempt Severance Arrangement, the following provisions of this subsection (b) apply.
(i) If the Non-Exempt Award vests in the ordinary course during the Participant’s Continuous Service in accordance with the vesting schedule set forth in the Award Agreement, and does not accelerate vesting under the terms of a Non-Exempt Severance Arrangement, in no event will the shares be issued in respect of such Non-Exempt Award any later than the later of: (i) December 31st of the calendar year that includes the applicable vesting date, or (ii) the 60th day that follows the applicable vesting date.
(ii) If vesting of the Non-Exempt Award accelerates under the terms of a Non-Exempt Severance Arrangement in connection with the Participant’s Separation from Service, and such vesting acceleration provisions were in effect as of the date of grant of the Non-Exempt Award and, therefore, are part of the terms of such Non-Exempt Award as of the date of grant, then the shares will be earlier issued in settlement of such Non-Exempt Award upon the Participant’s Separation from Service in accordance with the terms of the Non-Exempt Severance Arrangement, but in no event later than the 60th day that follows the date of the Participant’s Separation from Service. However, if at the time the shares would otherwise be issued the Participant is subject to the distribution limitations contained in Section 409A applicable to “specified employees,” as defined in Section 409A(a)(2)(B)(i) of the Code, such shares shall not be issued before the date that is six months following the date of such Participant’s Separation from Service, or, if earlier, the date of the Participant’s death that occurs within such six month period.
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(iii) If vesting of a Non-Exempt Award accelerates under the terms of a Non-Exempt Severance Arrangement in connection with a Participant’s Separation from Service, and such vesting acceleration provisions were not in effect as of the date of grant of the Non-Exempt Award and, therefore, are not a part of the terms of such Non-Exempt Award on the date of grant, then such acceleration of vesting of the Non-Exempt Award shall not accelerate the issuance date of the shares, but the shares shall instead be issued on the same schedule as set forth in the Grant Notice as if they had vested in the ordinary course during the Participant’s Continuous Service, notwithstanding the vesting acceleration of the Non-Exempt Award. Such issuance schedule is intended to satisfy the requirements of payment on a specified date or pursuant to a fixed schedule, as provided under Treasury Regulations Section 1.409A-3(a)(4).
(c) Treatment of Non-Exempt Awards Upon a Corporate Transaction for Employees and Consultants. The provisions of this subsection (c) shall apply and shall supersede anything to the contrary set forth in the Plan with respect to the permitted treatment of any Non-Exempt Award in connection with a Corporate Transaction if the Participant was either an Employee or Consultant upon the applicable date of grant of the Non-Exempt Award.
(i) Vested Non-Exempt Awards. The following provisions shall apply to any Vested Non-Exempt Award in connection with a Corporate Transaction:
(1) If the Corporate Transaction is also a Section 409A Change in Control then the Acquiring Entity may not assume, continue or substitute the Vested Non-Exempt Award. Upon the Section 409A Change in Control the settlement of the Vested Non-Exempt Award will automatically be accelerated and the shares will be immediately issued in respect of the Vested Non-Exempt Award. Alternatively, the Company may instead provide that the Participant will receive a cash settlement equal to the Fair Market Value of the shares that would otherwise be issued to the Participant upon the Section 409A Change in Control.
(2) If the Corporate Transaction is not also a Section 409A Change in Control, then the Acquiring Entity must either assume, continue or substitute each Vested Non-Exempt Award. The shares to be issued in respect of the Vested Non-Exempt Award shall be issued to the Participant by the Acquiring Entity on the same schedule that the shares would have been issued to the Participant if the Corporate Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of an issuance of shares, the Acquiring Entity may instead substitute a cash payment on each applicable issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to the Participant on such issuance dates, with the determination of the Fair Market Value of the shares made on the date of the Corporate Transaction.
(ii) Unvested Non-Exempt Awards. The following provisions shall apply to any Unvested Non-Exempt Award unless otherwise determined by the Board pursuant to subsection (e) of this Section.
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(1) In the event of a Corporate Transaction, the Acquiring Entity shall assume, continue or substitute any Unvested Non-Exempt Award. Unless otherwise determined by the Board, any Unvested Non-Exempt Award will remain subject to the same vesting and forfeiture restrictions that were applicable to the Award prior to the Corporate Transaction. The shares to be issued in respect of any Unvested Non-Exempt Award shall be issued to the Participant by the Acquiring Entity on the same schedule that the shares would have been issued to the Participant if the Corporate Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of an issuance of shares, the Acquiring Entity may instead substitute a cash payment on each applicable issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to the Participant on such issuance dates, with the determination of Fair Market Value of the shares made on the date of the Corporate Transaction.
(2) If the Acquiring Entity will not assume, substitute or continue any Unvested Non-Exempt Award in connection with a Corporate Transaction, then such Award shall automatically terminate and be forfeited upon the Corporate Transaction with no consideration payable to any Participant in respect of such forfeited Unvested Non-Exempt Award. Notwithstanding the foregoing, to the extent permitted and in compliance with the requirements of Section 409A, the Board may in its discretion determine to elect to accelerate the vesting and settlement of the Unvested Non-Exempt Award upon the Corporate Transaction, or instead substitute a cash payment equal to the Fair Market Value of such shares that would otherwise be issued to the Participant, as further provided in subsection (e)(ii) below. In the absence of such discretionary election by the Board, any Unvested Non-Exempt Award shall be forfeited without payment of any consideration to the affected Participants if the Acquiring Entity will not assume, substitute or continue the Unvested Non-Exempt Awards in connection with the Corporate Transaction.
(3) The foregoing treatment shall apply with respect to all Unvested Non-Exempt Awards upon any Corporate Transaction, and regardless of whether or not such Corporate Transaction is also a Section 409A Change in Control.
(d) Treatment of Non-Exempt Awards Upon a Corporate Transaction for Non-Employee Directors. The following provisions of this subsection (d) shall apply and shall supersede anything to the contrary that may be set forth in the Plan with respect to the permitted treatment of a Non-Exempt Director Award in connection with a Corporate Transaction.
(i) If the Corporate Transaction is also a Section 409A Change in Control then the Acquiring Entity may not assume, continue or substitute the Non-Exempt Director Award. Upon the Section 409A Change in Control the vesting and settlement of any Non-Exempt Director Award will automatically be accelerated and the shares will be immediately issued to the Participant in respect of the Non-Exempt Director Award. Alternatively, the Company may provide that the Participant will instead receive a cash settlement equal to the Fair Market Value of the shares that would otherwise be issued to the Participant upon the Section 409A Change in Control pursuant to the preceding provision.
(ii) If the Corporate Transaction is not also a Section 409A Change in Control, then the Acquiring Entity must either assume, continue or substitute the Non-Exempt Director Award. Unless otherwise determined by the Board, the Non-Exempt Director Award will remain subject to the same vesting and forfeiture restrictions that were applicable to the Award prior to the Corporate Transaction. The shares to be issued in respect of the Non-Exempt Director Award shall be issued to the Participant by the Acquiring Entity on the same schedule that the shares would have been issued to the Participant if the Corporate Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of an issuance of shares, the Acquiring Entity may instead substitute a cash payment on each applicable issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to the Participant on such issuance dates, with the determination of Fair Market Value made on the date of the Corporate Transaction.
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(e) If the RSU Award is a Non-Exempt Award, then the provisions in this Section 11(e) shall apply and supersede anything to the contrary that may be set forth in the Plan or the Award Agreement with respect to the permitted treatment of such Non-Exempt Award:
(i) Any exercise by the Board of discretion to accelerate the vesting of a Non-Exempt Award shall not result in any acceleration of the scheduled issuance dates for the shares in respect of the Non-Exempt Award unless earlier issuance of the shares upon the applicable vesting dates would be in compliance with the requirements of Section 409A.
(ii) The Company explicitly reserves the right to earlier settle any Non-Exempt Award to the extent permitted and in compliance with the requirements of Section 409A, including pursuant to any of the exemptions available in Treasury Regulations Section 1.409A-3(j)(4)(ix).
(iii) To the extent the terms of any Non-Exempt Award provide that it will be settled upon a Change in Control or Corporate Transaction, to the extent it is required for compliance with the requirements of Section 409A, the Change in Control or Corporate Transaction event triggering settlement must also constitute a Section 409A Change in Control. To the extent the terms of a Non-Exempt Award provides that it will be settled upon a termination of employment or termination of Continuous Service, to the extent it is required for compliance with the requirements of Section 409A, the termination event triggering settlement must also constitute a Separation From Service. However, if at the time the shares would otherwise be issued to a Participant in connection with a “separation from service” such Participant is subject to the distribution limitations contained in Section 409A applicable to “specified employees,” as defined in Section 409A(a)(2)(B)(i) of the Code, such shares shall not be issued before the date that is six months following the date of the Participant’s Separation From Service, or, if earlier, the date of the Participant’s death that occurs within such six month period.
(iv) The provisions in this subsection (e) for delivery of the shares in respect of the settlement of an RSU Award that is a Non-Exempt Award are intended to comply with the requirements of Section 409A so that the delivery of the shares to the Participant in respect of such Non-Exempt Award will not trigger the additional tax imposed under Section 409A, and any ambiguities herein will be so interpreted.
12. | Severability. |
If all or any part of the Plan or any Award Agreement is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of the Plan or such Award Agreement not declared to be unlawful or invalid. Any Section of the Plan or any Award Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.
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13. | Termination of the Plan. |
The Board may suspend or terminate the Plan at any time. No Incentive Stock Options may be granted after the tenth anniversary of the earlier of: (i) the Adoption Date, or (ii) the date the Plan is approved by the Company’s stockholders. No Awards may be granted under the Plan while the Plan is suspended or after it is terminated.
14. | Definitions. |
As used in the Plan, the following definitions apply to the capitalized terms indicated below:
(a) “Acquiring Entity” means the surviving or acquiring corporation (or its parent company) in connection with a Corporate Transaction.
(b) “Adoption Date” means the date the Plan is first approved by the Board or Compensation Committee.
(c) “Affiliate” means, at the time of determination, any “parent” or “subsidiary” of the Company as such terms are defined in Rule 405 promulgated under the Securities Act. The Board may determine the time or times at which “parent” or “subsidiary” status is determined within the foregoing definition.
(d) “Applicable Law” means any applicable securities, federal, state, foreign, material local or municipal or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, listing rule, regulation, judicial decision, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Body (including under the authority of any applicable self-regulating organization such as the Nasdaq Stock Market, New York Stock Exchange, or the Financial Industry Regulatory Authority).
(e) “Award” means any right to receive Common Stock, cash or other property granted under the Plan (including an Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award, an RSU Award, a SAR, a Performance Award or any Other Award).
(f) “Award Agreement” means a written or electronic agreement between the Company and a Participant evidencing the terms and conditions of an Award. The Award Agreement generally consists of the Grant Notice and the agreement containing the written summary of the general terms and conditions applicable to the Award and which is provided, including through electronic means, to a Participant along with the Grant Notice.
(g) “Board” means the Board of Directors of the Company (or its designee). Any decision or determination made by the Board shall be a decision or determination that is made in the sole discretion of the Board (or its designee), and such decision or determination shall be final and binding on all Participants.
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(h) “Capitalization Adjustment” means any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan or subject to any Award after the date the Plan is adopted by the Board without the receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or any similar equity restructuring transaction, as that term is used in Statement of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.
(i) “Cause” has the meaning ascribed to such term in any written agreement between a Participant and the Company defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of any of the following events: (i) the Participant’s dishonest statements or acts with respect to the Company or any Affiliate of the Company, or any current or prospective customers, suppliers, vendors or other third parties with which such entity does business; (ii) the Participant’s commission of (A) a felony or (B) any misdemeanor involving moral turpitude, deceit, dishonesty or fraud; (iii) the Participant’s failure to perform the Participant’s assigned duties and responsibilities to the reasonable satisfaction of the Company which failure continues, in the reasonable judgment of the Company, after written notice given to the Participant by the Company; (iv) the Participant’s gross negligence, willful misconduct or insubordination with respect to the Company or any Affiliate of the Company; or (v) the Participant’s material violation of any provision of any agreement(s) between the Participant and the Company or any Affiliate of the Company relating to noncompetition, nonsolicitation, nondisclosure and/or assignment of inventions. The determination that a termination of the Participant’s Continuous Service is either for Cause or without Cause will be made by the Board with respect to Participants who are executive officers of the Company and by the Company’s Chief Executive Officer with respect to Participants who are not executive officers of the Company. Any determination by the Company that the Continuous Service of a Participant was terminated with or without Cause for the purposes of outstanding Awards held by such Participant will have no effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose.
(j) “Change in Control” or “Change of Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:
(i) any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction. Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (A) on account of the acquisition of securities of the Company directly from the Company, (B) on account of the acquisition of securities of the Company by an investor, any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities, or (C) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control shall be deemed to occur;
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(ii) there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than 50% of the combined outstanding voting power of the Acquiring Entity in such merger, consolidation or similar transaction or (B) more than 50% of the combined outstanding voting power of the parent of the Acquiring Entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction;
(iii) there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity, more than 50% of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition; or
(iv) individuals who, on the date the Plan is adopted by the Board, are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member shall, for purposes of this Plan, be considered as a member of the Incumbent Board.
Notwithstanding the foregoing or any other provision of this Plan, (A) the term Change in Control shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company, (B) the definition of Change in Control (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant shall supersede the foregoing definition with respect to Awards subject to such agreement; provided, however, that if no definition of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition shall apply, and (C) with respect to any nonqualified deferred compensation that becomes payable on account of the Change in Control, the transaction or event described in clause (i), (ii), (iii), or (iv) also constitutes a Section 409A Change in Control if required in order for the payment not to violate Section 409A of the Code.
(k) “Code” means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.
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(l) “Committee” means the Compensation Committee and any other committee of one or more Directors to whom authority has been delegated by the Board or Compensation Committee in accordance with the Plan.
(m) “Common Stock” means the common stock of the Company.
(n) “Company” means AirSculpt Technologies, Inc., a Delaware corporation.
(o) “Compensation Committee” means the Compensation Committee of the Board.
(p) “Consultant” means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated for such services. However, service solely as a Director, or payment of a fee for such service, will not cause a Director to be considered a “Consultant” for purposes of the Plan. Notwithstanding the foregoing, a person is treated as a Consultant under this Plan only if a Form S-8 Registration Statement under the Securities Act is available to register either the offer or the sale of the Company’s securities to such person.
(q) “Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Director or Consultant or a change in the Entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, will not terminate a Participant’s Continuous Service; provided, however, that if the Entity for which a Participant is rendering services ceases to qualify as an Affiliate, as determined by the Board, such Participant’s Continuous Service will be considered to have terminated on the date such Entity ceases to qualify as an Affiliate. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or to a Director will not constitute an interruption of Continuous Service. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s sole discretion, may determine whether Continuous Service will be considered interrupted in the case of (i) any leave of absence approved by the Board or chief executive officer, including sick leave, military leave or any other personal leave, or (ii) transfers between the Company, an Affiliate, or their successors. Notwithstanding the foregoing, a leave of absence will be treated as Continuous Service for purposes of vesting in an Award only to such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law. In addition, to the extent required for exemption from or compliance with Section 409A, the determination of whether there has been a termination of Continuous Service will be made, and such term will be construed, in a manner that is consistent with the definition of “separation from service” as defined under Treasury Regulation Section 1.409A-1(h) (without regard to any alternative definition thereunder).
(r) “Corporate Transaction” means the consummation, in a single transaction or in a series of related transactions, of any one or more of the following events:
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(i) a sale or other disposition of all or substantially all, as determined by the Board, of the consolidated assets of the Company and its Subsidiaries;
(ii) a sale or other disposition of at least 50% of the outstanding securities of the Company;
(iii) a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or
(iv) a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.
Notwithstanding the foregoing or any other provision of this Plan, (A) the term Corporate Transaction shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company, (B) the definition of Corporate Transaction (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant shall supersede the foregoing definition with respect to Awards subject to such agreement; provided, however, that if no definition of Corporate Transaction or any analogous term is set forth in such an individual written agreement, the foregoing definition shall apply, and (C) with respect to any nonqualified deferred compensation that becomes payable on account of the Corporate Transaction, the transaction or event described in clause (i), (ii), (iii), or (iv) also constitutes a Section 409A Change in Control if required in order for the payment not to violate Section 409A of the Code.
(s) “Director” means a member of the Board.
(t) “determine” or “determined” means as determined by the Board or the Committee (or its designee) in its sole discretion.
(u) “Disability” means, with respect to a Participant, such Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months, as provided in Section 22(e)(3) of the Code, and will be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances.
(v) “Effective Date” means immediately prior to the IPO Date, provided that this Plan is approved by the Company’s stockholders prior to the IPO Date.
(w) “Employee” means any person employed by the Company or an Affiliate. However, service solely as a Director, or payment of a fee for such services, will not cause a Director to be considered an “Employee” for purposes of the Plan.
(x) “Employer” means the Company or the Affiliate of the Company that employs the Participant.
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(y) “Entity” means a corporation, partnership, limited liability company or other entity.
(z) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(aa) “Exchange Act Person” means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding securities pursuant to a registered public offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is the Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities.
(bb) “Fair Market Value” means, as of any date, unless otherwise determined by the Board, the value of the Common Stock (as determined on a per share or aggregate basis, as applicable) determined as follows:
(i) If the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market Value will be the closing sales price for such stock as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as reported in a source the Board deems reliable.
(ii) If there is no closing sales price for the Common Stock on the date of determination, then the Fair Market Value will be the closing selling price on the last preceding date for which such quotation exists.
(iii) In the absence of such markets for the Common Stock, or if otherwise determined by the Board, the Fair Market Value will be determined by the Board in good faith and in a manner that complies with Sections 409A and 422 of the Code.
(cc) “Governmental Body” means any: (i) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (ii) federal, state, local, municipal, foreign or other government; (iii) governmental or regulatory body, or quasi-governmental body of any nature (including any governmental division, department, administrative agency or bureau, commission, authority, instrumentality, official, ministry, fund, foundation, center, organization, unit, body or Entity and any court or other tribunal, and for the avoidance of doubt, any Tax authority) or other body exercising similar powers or authority; or (iv) self-regulatory organization (including the Nasdaq Stock Market, New York Stock Exchange, and the Financial Industry Regulatory Authority).
(dd) “Grant Notice” means the notice provided to a Participant that he or she has been granted an Award under the Plan and which includes the name of the Participant, the type of Award, the date of grant of the Award, number of shares of Common Stock subject to the Award or potential cash payment right, (if any), the vesting schedule for the Award (if any) and other key terms applicable to the Award.
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(ee) “Incentive Stock Option” means an option granted pursuant to Section 4 of the Plan that is intended to be, and qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code.
(ff) “IPO Date” means the date of the underwriting agreement between the Company and the underwriter(s) managing the initial public offering of the Common Stock, pursuant to which the Common Stock is priced for the initial public offering.
(gg) “Materially Impair” means any amendment to the terms of the Award that materially adversely affects the Participant’s rights under the Award. A Participant's rights under an Award will not be deemed to have been Materially Impaired by any such amendment if the Board, in its sole discretion, determines that the amendment, taken as a whole, does not materially impair the Participant's rights. For example, the following types of amendments to the terms of an Award do not Materially Impair the Participant’s rights under the Award: (i) imposition of reasonable restrictions on the minimum number of shares subject to an Option or SAR that may be exercised; (ii) to maintain the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; (iii) to change the terms of an Incentive Stock Option in a manner that disqualifies, impairs or otherwise affects the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; (iv) to clarify the manner of exemption from, or to bring the Award into compliance with or qualify it for an exemption from, Section 409A; or (v) to comply with other Applicable Laws.
(hh) “Non-Employee Director” means a Director who either (i) is not a current employee or officer of the Company or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an Affiliate for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)), does not possess an interest in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3.
(ii) “Non-Exempt Award” means any Award that is subject to, and not exempt from, Section 409A, including as the result of (i) a deferral of the issuance of the shares subject to the Award which is elected by the Participant or imposed by the Company, or (ii) the terms of any Non-Exempt Severance Agreement.
(jj) “Non-Exempt Director Award” means a Non-Exempt Award granted to a Participant who was a Director but not an Employee on the applicable grant date.
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(kk) “Non-Exempt Severance Arrangement” means a severance arrangement or other agreement between the Participant and the Company that provides for acceleration of vesting of an Award and issuance of the shares in respect of such Award upon the Participant’s termination of employment or separation from service (as such term is defined in Section 409A(a)(2)(A)(i) of the Code (and without regard to any alternative definition thereunder) (“Separation from Service”) and such severance benefit does not satisfy the requirements for an exemption from application of Section 409A provided under Treasury Regulations Section 1.409A-1(b)(4), 1.409A-1(b)(9) or otherwise.
(ll) “Nonstatutory Stock Option” means any option granted pursuant to Section 4 of the Plan that does not qualify as an Incentive Stock Option.
(mm) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act.
(nn) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan.
(oo) “Option Agreement” means a written or electronic agreement between the Company and the Optionholder evidencing the terms and conditions of the Option grant. The Option Agreement includes the Grant Notice for the Option and the agreement containing the written summary of the general terms and conditions applicable to the Option and which is provided, including through electronic means, to a Participant along with the Grant Notice. Each Option Agreement will be subject to the terms and conditions of the Plan.
(pp) “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.
(qq) “Other Award” means an award valued in whole or in part by reference to, or otherwise based on, Common Stock, including the appreciation in value thereof (e.g., options or stock rights with an exercise price or strike price less than 100% of the Fair Market Value at the time of grant) that is not an Incentive Stock Option, Nonstatutory Stock Option, SAR, Restricted Stock Award, RSU Award or Performance Award.
(rr) “Other Award Agreement” means a written or electronic agreement between the Company and a holder of an Other Award evidencing the terms and conditions of an Other Award grant. Each Other Award Agreement will be subject to the terms and conditions of the Plan.
(ss) “Own,” “Owned,” “Owner,” “Ownership” means that a person or Entity will be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.
(tt) “Participant” means an Employee, Director or Consultant to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award.
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(uu) “Performance Award” means an Award that may vest or may be exercised or a cash award that may vest or become earned and paid contingent upon the attainment during a Performance Period of certain Performance Goals and which is granted under the terms and conditions of Section 5(b) pursuant to such terms as are approved by the Board. In addition, to the extent permitted by Applicable Law and set forth in the applicable Award Agreement, the Board may determine that cash or other property may be used in payment of Performance Awards. Performance Awards that are settled in cash or other property are not required to be valued in whole or in part by reference to, or otherwise based on, the Common Stock.
(vv) “Performance Criteria” means one or more criteria that the Board will select for purposes of establishing the Performance Goals for a Performance Period. The Performance Criteria that will be used to establish such Performance Goals may be based on any one of, or combination of, the following as determined by the Board: earnings (including earnings per share and net earnings); earnings before interest, taxes and depreciation; earnings before interest, taxes, depreciation and amortization; total stockholder return; return on equity or average stockholder’s equity; return on assets, investment, or capital employed; stock price; margin (including gross margin); income (before or after taxes); operating income; operating income after taxes; pre-tax profit; operating cash flow; sales or revenue targets; increases in revenue or product revenue; expenses and cost reduction goals; improvement in or attainment of working capital levels; economic value added (or an equivalent metric); market share; cash flow; cash flow per share; share price performance; debt reduction; customer satisfaction; stockholders’ equity; capital expenditures; debt levels; operating profit or net operating profit; workforce diversity; growth of net income or operating income; billings; financing; regulatory milestones; stockholder liquidity; corporate governance and compliance; intellectual property; personnel matters; progress of internal research; progress of partnered programs; partner satisfaction; budget management; partner or collaborator achievements; internal controls, including those related to the Sarbanes-Oxley Act of 2002; investor relations, analysts and communication; implementation or completion of projects or processes; employee retention; number of users, including unique users; strategic partnerships or transactions (including in-licensing and out-licensing of intellectual property); establishing relationships with respect to the marketing, distribution and sale of the Company’s products; supply chain achievements; co-development, co-marketing, profit sharing, joint venture or other similar arrangements; individual performance goals; corporate development and planning goals; and other measures of performance selected by the Board or Committee whether or not listed herein.
(ww) “Performance Goals” means, for a Performance Period, one or more goals established by the Board for the Performance Period based upon the Performance Criteria. Performance Goals may be based on a Company-wide basis, with respect to one or more business units, divisions, Affiliates, or business segments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. Unless specified otherwise by the Board (i) in the Award Agreement at the time the Award is granted or (ii) in such other document setting forth the Performance Goals at the time the Performance Goals are established, the Board will appropriately make adjustments in the method of calculating the attainment of Performance Goals for a Performance Period as follows: (1) to exclude restructuring and/or other nonrecurring charges; (2) to exclude exchange rate effects; (3) to exclude the effects of changes to generally accepted accounting principles; (4) to exclude the effects of any statutory adjustments to corporate tax rates; (5) to exclude the effects of items that are “unusual” in nature or occur “infrequently” as determined under generally accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures; (7) to assume that any business divested by the Company achieved performance objectives at targeted levels during the balance of a Performance Period following such divestiture; (8) to exclude the effect of any change in the outstanding shares of common stock of the Company by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends; (9) to exclude the effects of stock based compensation and the award of bonuses under the Company’s bonus plans; (10) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles; and (11) to exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted accounting principles. In addition, the Board may establish or provide for other adjustment items in the Award Agreement at the time the Award is granted or in such other document setting forth the Performance Goals at the time the Performance Goals are established. In addition, the Board retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of Performance Goals and to define the manner of calculating the Performance Criteria it selects to use for such Performance Period. Partial achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement as specified in the Award Agreement or the written terms of a Performance Cash Award.
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(xx) “Performance Period” means the period of time selected by the Board over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to vesting or exercise of an Award. Performance Periods may be of varying and overlapping duration, at the sole discretion of the Board.
(yy) “Plan” means this AirSculpt Technologies, Inc. 2021 Equity Incentive Plan, as amended from time to time.
(zz) “Plan Administrator” means the person, persons, and/or third-party administrator designated by the Company to administer the day to day operations of the Plan and the Company’s other equity incentive programs.
(aaa) “Post-Termination Exercise Period” means the period following termination of a Participant’s Continuous Service within which an Option or SAR is exercisable, as specified in Section 4(h).
(bbb) “Restricted Stock Award” or “RSA” means an Award of shares of Common Stock which is granted pursuant to the terms and conditions of Section 5(a).
(ccc) “Restricted Stock Award Agreement” means a written or electronic agreement between the Company and a holder of a Restricted Stock Award evidencing the terms and conditions of a Restricted Stock Award grant. The Restricted Stock Award Agreement includes the Grant Notice for the Restricted Stock Award and the agreement containing the written summary of the general terms and conditions applicable to the Restricted Stock Award and which is provided, including by electronic means, to a Participant along with the Grant Notice. Each Restricted Stock Award Agreement will be subject to the terms and conditions of the Plan.
(ddd) “RSU Award” or “RSU” means an Award of restricted stock units representing the right to receive an issuance of shares of Common Stock which is granted pursuant to the terms and conditions of Section 5(a).
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(eee) “RSU Award Agreement” means a written or electronic agreement between the Company and a holder of an RSU Award evidencing the terms and conditions of an RSU Award grant. The RSU Award Agreement includes the Grant Notice for the RSU Award and the agreement containing the written summary of the general terms and conditions applicable to the RSU Award and which is provided, including by electronic means, to a Participant along with the Grant Notice. Each RSU Award Agreement will be subject to the terms and conditions of the Plan.
(fff) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.
(ggg) “Rule 405” means Rule 405 promulgated under the Securities Act.
(hhh) “Section 409A” means Section 409A of the Code and the regulations and other guidance thereunder.
(iii) “Section 409A Change in Control” means a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the Company’s assets, as provided in Section 409A(a)(2)(A)(v) of the Code and Treasury Regulations Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).
(jjj) “Securities Act” means the Securities Act of 1933, as amended.
(kkk) “Share Reserve” means the number of shares available for issuance under the Plan as set forth in Section 2(a).
(lll) “Stock Appreciation Right” or “SAR” means a right to receive the appreciation on Common Stock that is granted pursuant to the terms and conditions of Section 4.
(mmm) “SAR Agreement” means a written or electronic agreement between the Company and a holder of a SAR evidencing the terms and conditions of a SAR grant. The SAR Agreement includes the Grant Notice for the SAR and the agreement containing the written summary of the general terms and conditions applicable to the SAR and which is provided, including by electronic means, to a Participant along with the Grant Notice. Each SAR Agreement will be subject to the terms and conditions of the Plan.
(nnn) “Subsidiary” means, with respect to the Company, (i) any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation will have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than 50%.
(ooo) “Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any Affiliate.
32
(ppp) “Trading Policy” means the Company’s policy permitting certain individuals to sell Company shares only during certain "window" periods and/or otherwise restricts the ability of certain individuals to transfer or encumber Company shares, as in effect from time to time.
(qqq) “Unvested Non-Exempt Award” means the portion of any Non-Exempt Award that had not vested in accordance with its terms upon or prior to the date of any Corporate Transaction.
(rrr) “Vested Non-Exempt Award” means the portion of any Non-Exempt Award that had vested in accordance with its terms upon or prior to the date of a Corporate Transaction.
33
EXHIBIT 10.7
AIRSCULPT TECHNOLOGIES, INC.
FORM OF RSU AWARD GRANT NOTICE
(2021 EQUITY INCENTIVE PLAN)
AirSculpt Technologies, Inc. (the “Company”) has awarded to you (the “Participant”) the number of restricted stock units specified and on the terms set forth below in consideration of your services (the “RSU Award”). Your RSU Award is subject to all of the terms and conditions as set forth herein and in the AirSculpt Technologies, Inc. 2021 Equity Incentive Plan (the “Plan”) and the Award Agreement (the “Agreement”), which are attached hereto and incorporated herein in their entirety. Capitalized terms not explicitly defined herein but defined in the Plan or the Agreement shall have the meanings set forth in the Plan or the Agreement.
Participant: |
|
Date of Grant: | |
Vesting Commencement Date: | |
Number of Restricted Stock Units: | |
Vesting Schedule: |
· One-third (1/3) of the Restricted Stock Units will vest on the first anniversary of the Date of Grant; · One-third (1/3) of the Restricted Stock Units will vest on the second anniversary of the Date of Grant; and · One-third (1/3) of the Restricted Stock Units will vest on the third anniversary of the Date of Grant. |
Notwithstanding the foregoing, vesting shall terminate immediately upon the Participant’s termination of employment with the Company and all then unvested Restricted Stock Units shall terminate immediately, automatically and without consideration on the date of such termination, subject to the Accelerated Vesting provision below; provided, however, notwithstanding the foregoing, the Board in its sole discretion may determine to continue the vesting of then unvested Restricted Stock Units during any period in which the Participant’s Continuous Service with the Company continues notwithstanding the Participant’s termination of employment.
Accelerated Vesting: In the event that the Participant’s employment is terminated (i) by the Company without Cause, (ii) by the Participant with Good Reason, or (iii) due to the Participant’s death or Disability, then, in each case, subject to Section 5 of the RSU Award Agreement, [all Restricted Stock Units granted hereunder shall accelerate and vest on the date of the Participant’s termination of employment.] [all Restricted Stock Units granted hereunder that would have vested during the twelve (12) month period immediately following the date of termination of the Participant’s employment shall accelerate and vest on the date of termination of the Participant’s employment.] For purposes of the RSU Award Agreement, “Good Reason” shall have the meaning ascribed to such term in the Participant’s employment agreement with the Company dated as of [___], as may be amended from time to time.
Issuance Schedule: One share of Common Stock will be issued at the time set forth in Sections 5 and 6 of the Agreement for each Restricted Stock Unit which vests.
Participant Acknowledgments: By your signature below or by electronic acceptance or authentication in a form authorized by the Company, you understand and agree that:
· | The RSU Award is governed by this RSU Award Grant Notice (the “Grant Notice”), and the provisions of the Plan and the Agreement, all of which are made a part of this document. Unless otherwise provided in the Plan, this Grant Notice and the Agreement (together, the “RSU Award Agreement”) may not be modified, amended or revised except in a writing signed by you and a duly authorized officer of the Company. |
· | You have read and are familiar with the provisions of the Plan, the RSU Award Agreement and the Prospectus. In the event of any conflict between the provisions in the RSU Award Agreement, or the Prospectus and the terms of the Plan, the terms of the Plan shall control. |
· | The RSU Award Agreement sets forth the entire understanding between you and the Company regarding the acquisition of Common Stock and supersedes all prior oral and written agreements, promises and/or representations on that subject with the exception of: (i) other equity awards previously granted to you, and (ii) any written employment agreement, offer letter, severance agreement, written severance plan or policy, or other written agreement between the Company and you in each case that specifies the terms that should govern this RSU Award. |
AIRSCULPT TECHNOLOGIES, INC. | PARTICIPANT: | |||
By: | ||||
Signature | Signature | |||
Title: | Date: | |||
Date: |
AIRSCULPT TECHNOLOGIES, INC.
AWARD AGREEMENT
(2021 EQUITY INCENTIVE PLAN)
As reflected by your RSU Award Grant Notice (“Grant Notice”), AirSculpt Technologies, Inc. (the “Company”) has granted you a RSU Award under the AirSculpt Technologies, Inc. 2021 Equity Incentive Plan (the “Plan”), attached hereto as Exhibit A, for the number of restricted stock units as indicated in your Grant Notice (the “RSU Award”). The terms of your RSU Award as specified in this Award Agreement for your RSU Award (this “Agreement”) and the Grant Notice constitute your “RSU Award Agreement”. Defined terms not explicitly defined in this Agreement but defined in the Grant Notice or the Plan shall have the same definitions as in the Grant Notice or Plan, as applicable.
The general terms applicable to your RSU Award are as follows:
1. | GOVERNING PLAN DOCUMENT. Your RSU Award is subject to all the provisions of the Plan, including but not limited to the provisions in: |
(a) Section 6 of the Plan regarding the impact of a Capitalization Adjustment, dissolution, liquidation, or Corporate Transaction on your RSU Award;
(b) Section 9(e) of the Plan regarding the Company’s retained rights to terminate your Continuous Service notwithstanding the grant of the RSU Award; and
(c) Section 8 of the Plan regarding the tax consequences of your RSU Award.
Your RSU Award is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the RSU Award Agreement and the provisions of the Plan, the provisions of the Plan shall control.
2. | GRANT OF THE RSU AWARD. This RSU Award represents your right to be issued on a future date the number of shares of the Company’s Common Stock that is equal to the number of restricted stock units indicated in the Grant Notice as modified to reflect any Capitalization Adjustment and subject to your satisfaction of the vesting conditions set forth therein (the “Restricted Stock Units”). Any additional Restricted Stock Units that become subject to the RSU Award pursuant to Capitalization Adjustments as set forth in the Plan and the provisions of Section 3 below, if any, shall be subject, in a manner determined by the Board, to the same forfeiture restrictions, restrictions on transferability, and time and manner of delivery as applicable to the other Restricted Stock Units covered by your RSU Award. |
3. | DIVIDEND EQUIVALENTS. If cash dividends or other cash distributions are paid in respect of the shares of the Company’s Common Stock underlying unvested Restricted Stock Units, then a dividend equivalent equal to the amount paid in respect of one share of Common Stock shall accumulate and be paid with respect to each unvested Restricted Stock Unit at time of settlement; provided that any dividend equivalent rights granted shall be subject to the same vesting terms as the related Restricted Stock Units. |
4. | WITHHOLDING OBLIGATIONS. As further provided in Section 8 of the Plan, you hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for, any sums required to satisfy the federal, state, local and foreign tax withholding obligations, if any, which arise in connection with your RSU Award (the “Withholding Obligation”) in accordance with the withholding procedures established by the Company. Unless the Withholding Obligation is satisfied, the Company shall have no obligation to deliver to you any Common Stock in respect of the RSU Award. In the event the Withholding Obligation of the Company arises prior to the delivery to you of Common Stock or it is determined after the delivery of Common Stock to you that the amount of the Withholding Obligation was greater than the amount withheld by the Company, you agree to indemnify and hold the Company harmless from any failure by the Company to withhold the proper amount. |
5. | RELEASE AGREEMENT. Any obligation of the Company to deliver to you shares of Common Stock in respect of Restricted Stock Units that have vested due to the Accelerated Vesting provision of the Grant Notice, as a result of your termination of employment, is conditioned upon you delivering to the Company and not revoking a general release of all claims in the form attached to your employment agreement with the Company (the “Release Agreement”), within 60 days following your termination of employment (the “Release Period”). Following the date on which the Release Agreement becomes fully effective and irrevocable but no later than seventy (70) days following the date of termination of your employment, the Company shall deliver to you a number of shares of Common Stock equal to the aggregate number of Restricted Stock Units that have vested pursuant to the Accelerated Vesting provision of the Grant Notice; provided, that if the Release Period spans two (2) calendar years, the shares of Common Stock shall be delivered to you in the later calendar year. If the Release Agreement does not become fully effective and irrevocable prior to the expiration of the Release Period, all Restricted Stock Units will be forfeited immediately, automatically and without consideration as of the date of your termination of employment. |
6. | DATE OF ISSUANCE. |
(a) The issuance of shares in respect of the Restricted Stock Units is intended to comply with Treasury Regulations Section 1.409A-1(b)(4) and will be construed and administered in such a manner. Subject to the satisfaction of the Withholding Obligation, if any, in the event one or more Restricted Stock Units vests, the Company shall issue to you one (1) share of Common Stock for each Restricted Stock Unit that vests on the applicable vesting date(s) (subject to any adjustment under Section 3 above, and subject to any different provisions in the Grant Notice or in Section 5 above). Each issuance date determined by this paragraph is referred to as an “Original Issuance Date.”
(b) If the Original Issuance Date falls on a date that is not a business day, delivery shall instead occur on the next following business day. In addition, if:
(i) | the Original Issuance Date does not occur (1) during an “open window period” applicable to you, as determined by the Company in accordance with the Company’s then-effective policy on trading in Company securities, or (2) on a date when you are otherwise permitted to sell shares of Common Stock on an established stock exchange or stock market (including but not limited to under a previously established written trading plan that meets the requirements of Rule 10b5-1 under the Exchange Act and was entered into in compliance with the Company’s policies (a “10b5-1 Arrangement”)), and |
(ii) | either (1) a Withholding Obligation does not apply, or (2) the Company decides, prior to the Original Issuance Date, (A) not to satisfy the Withholding Obligation by withholding shares of Common Stock from the shares otherwise due, on the Original Issuance Date, to you under this Award, and (B) not to permit you to enter into a “same day sale” commitment with a broker-dealer (including but not limited to a commitment under a 10b5-1 Arrangement) and (C) not to permit you to pay your Withholding Obligation in cash, |
then the shares that would otherwise be issued to you on the Original Issuance Date will not be delivered on such Original Issuance Date and will instead be delivered on the first business day when you are not prohibited from selling shares of the Company’s Common Stock in the open public market, but in no event later than December 31 of the calendar year in which the Original Issuance Date occurs (that is, the last day of your taxable year in which the Original Issuance Date occurs), or, if and only if permitted in a manner that complies with Treasury Regulations Section 1.409A-1(b)(4), no later than the date that is the 15th day of the third calendar month of the applicable year following the year in which the shares of Common Stock under this Award are no longer subject to a “substantial risk of forfeiture” within the meaning of Treasury Regulations Section 1.409A-1(d).
(c) To the extent the RSU Award is a Non-Exempt Award, the provisions of Section 11 of the Plan shall apply.
7. | LOCK-UP-PERIOD. By accepting your RSU Award, you agree that you will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any shares of Common Stock or other securities of the Company held by you, for a period of one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act or such longer period as the underwriters or the Company will request to facilitate compliance with FINRA Rule 2241 or any successor or similar rules or regulation (the “Lock-Up Period”); provided, however, that nothing contained in this section will prevent the exercise of a repurchase option, if any, in favor of the Company during the Lock-Up Period. You further agree to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriters that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to your shares of Common Stock until the end of such period. You also agree that any transferee of any shares of Common Stock (or other securities) of the Company held by you will be bound by this Section 6. The underwriters of the Company’s stock are intended third party beneficiaries of this Section 6 and will have the right, power and authority to enforce the provisions hereof as though they were a party hereto. |
8. | TRANSFERABILITY. Except as otherwise provided in the Plan, your RSU Award is not transferable, except by will or by the applicable laws of descent and distribution. |
9. | CORPORATE TRANSACTION. Your RSU Award is subject to the terms of any agreement governing a Corporate Transaction involving the Company, including, without limitation, a provision for the appointment of a stockholder representative that is authorized to act on your behalf with respect to any escrow, indemnities and any contingent consideration. |
10. | NO LIABILITIES FOR TAXES. As a condition to accepting the RSU Award, you hereby (a) agree to not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from the RSU Award or other Company compensation and (b) acknowledge that you were advised to consult with your own personal tax, financial and other legal advisors regarding the tax consequences of the RSU Award and have either done so or knowingly and voluntarily declined to do so. |
11. | SEVERABILITY. If any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid. Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid will, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid. |
12. | OTHER DOCUMENTS. You hereby acknowledge receipt of or the right to receive a document providing the information required by Rule 428(b)(1) promulgated under the Securities Act, which includes the Prospectus. In addition, you acknowledge receipt of the Company’s Trading Policy. |
13. | QUESTIONS. If you have questions regarding these or any other terms and conditions applicable to your RSU Award, including a summary of the applicable federal income tax consequences please see the Prospectus. |
EXHIBIT 10.8
AIRSCULPT TECHNOLOGIES, INC.
FORM OF PSU AWARD GRANT NOTICE
(2021 EQUITY INCENTIVE PLAN)
AirSculpt Technologies, Inc. (the “Company”) has awarded to you (the “Participant”) the number of performance stock units specified and on the terms set forth below in consideration of your services (the “PSU Award”). Your PSU Award is subject to all of the terms and conditions as set forth herein and in the AirSculpt Technologies, Inc. 2021 Equity Incentive Plan (the “Plan”) and the Award Agreement (the “Agreement”), which are attached hereto and incorporated herein in their entirety. Capitalized terms not explicitly defined herein but defined in the Plan or the Agreement shall have the meanings set forth in the Plan or the Agreement.
Participant: |
|
Date of Grant: | |
Vesting Commencement Date: | |
Number of Performance Stock Units: | |
Performance Period | [_______] through December 31, 2024 |
Performance Goal(s): |
Fifty percent (50%) of the Performance Stock Units shall vest based on the Company’s achievement of a Net Revenue goal (the “Net Revenue PSUs”) as follows: |
· | If the Company achieves a Net Revenue of $[______] or greater over a period of any consecutive trailing four (4) quarters during the Performance Period, then one hundred percent (100%) of the Net Revenue PSUs (i.e., 50% of the total Performance Stock Units) shall vest. |
Fifty percent (50%) of the Performance Stock Units shall vest based on the Company’s achievement of stock price performance goals (the “Stock Price PSUs”) as follows: |
· | One-third (1/3) of the Stock Price PSUs (i.e., 1/6th of the total Performance Stock Units) shall vest on the first date on which the 60-Day VWAP is equal to or exceeds a dollar amount equal to one hundred and twenty percent (120%) of the Baseline Stock Price; |
· | An additional one-third (1/3) of the Stock Price PSUs (i.e., 1/6th of the total Performance Stock Units) shall vest on the first date on which the 60-Day VWAP is equal to or exceeds a dollar amount equal to one-hundred and forty-five percent (145%) of the Baseline Stock Price; and |
· | An additional one-third (1/3) of the Stock Price PSUs (i.e., 1/6th of the total Performance Stock Units) shall vest on the first date on which the 60-Day VWAP is equal to or exceeds a dollar amount equal to one-hundred and seventy-five percent (175%) of the Baseline Stock Price. |
Notwithstanding the foregoing, vesting shall terminate immediately upon the Participant’s termination of employment with the Company and all then unvested or unsettled Performance Stock Units shall terminate immediately, automatically and without consideration on the date of such termination, subject to the Accelerated Vesting provision below; provided, however, notwithstanding the foregoing, the Board in its sole discretion may determine that any then unvested or unsettled Performance Stock Units remain outstanding and eligible to vest or settle based on achievement of the Performance Goals during any period in which the Participant’s Continuous Service with the Company continues notwithstanding the Participant’s termination of employment.
Any Performance Stock Units that are not vested (i.e., with respect to which the Performance Goal has not been achieved) prior to the end of the Performance Period, shall terminate immediately, automatically and without consideration on the last day of the Performance Period.
Certain Defined Terms:
· | “Net Revenue” shall mean the Company’s net revenue as determined by the Board consistent with generally accepted accounting principles. |
· | “Baseline Stock Price” shall mean [$___] per share of Common Stock. |
The Baseline Stock Price or the Performance Goals stated above shall be adjusted by the Board in its good faith discretion to reflect dividends declared on the Company’s Common Stock during the Performance Period, which shall be done in a manner to capture the performance obtained by same day reinvestment of such dividends at the closing price on the ex-dividend date.
· | “60-Day VWAP” shall mean the average of the volume weighted average price per share of Common Stock during any sixty (60) consecutive trading days. |
Accelerated Vesting: In the event that the Participant’s employment is terminated (i) by the Company without Cause, (ii) by the Participant with Good Reason, or (iii) due to the Participant’s death or Disability, then, in each case, subject to Section 5 of the PSU Award Agreement:
· | Any Performance Stock Units for which the applicable Performance Goal has been achieved prior to the date of the Participant’s termination of employment shall be vested and settled in full at a time based on the Issuance Schedule provision below; and |
· | Any Performance Stock Units for which the applicable Performance Goal has not been achieved as of the date of the Participant’s termination of employment shall remain outstanding and eligible to vest [during the twelve (12) month period immediately following the date of termination of your Continuous Service] on a pro-rated basis (based on a fraction the numerator of which is the number of days during which the Participant was employed by the Company during the Performance Period and the denominator of which is the total number of days in the Performance Period). Any such pro-rated Performance Stock Units shall vest solely to the extent the applicable Performance Goal is achieved by the Company during the [Performance Period] [the twelve (12) month period immediately following the date of termination of your Continuous Service]. Any pro-rated Performance Stock Units for which the Performance Goal is achieved after the Participant’s termination of employment shall be settled at a time based on the Issuance Schedule provision below. For the avoidance of doubt, the Performance Stock Units that do not remain outstanding and eligible to vest in accordance with the foregoing (whether on a pro-rated basis or otherwise), shall terminate immediately, automatically and without consideration on the date of the Participant’s termination of employment. |
For purposes of the PSU Award Agreement, “Good Reason” shall have the meaning ascribed to such term in the Participant’s employment agreement with the Company dated as of [___], as may be amended from time to time.
Change in Control: Upon a Change in Control, all unvested Performance Stock Units shall convert to time-vesting restricted stock units that vest in their entirety on the last day of the Performance Period, subject to the Participant’s Continuous Service with the Company through such last day of the Performance Period. In the event that [at any time within the eighteen (18) months immediately] after the occurrence of a Change in Control, the Participant’s Continuous Service is terminated (i) by the Company without Cause, (ii) by the Participant with Good Reason, or (iii) due to the Participant’s death or Disability, then, in each case, subject to Section 5 of the PSU Award Agreement, all of the Participant’s Performance Stock Units that were converted to time-vesting restricted stock units pursuant to this Change in Control provision shall vest and be settled in full at a time based on the Issuance Schedule provision below.
Issuance Schedule: One share of Common Stock will be issued at the time set forth in Sections 5 and 6 of the Agreement for each Performance Stock Unit which vests.
Participant Acknowledgments: By your signature below or by electronic acceptance or authentication in a form authorized by the Company, you understand and agree that:
· | The PSU Award is governed by this PSU Award Grant Notice (the “Grant Notice”), and the provisions of the Plan and the Agreement, all of which are made a part of this document. Unless otherwise provided in the Plan, this Grant Notice and the Agreement (together, the “PSU Award Agreement”) may not be modified, amended or revised except in a writing signed by you and a duly authorized officer of the Company. |
· | You have read and are familiar with the provisions of the Plan, the PSU Award Agreement and the Prospectus. In the event of any conflict between the provisions in the PSU Award Agreement, or the Prospectus and the terms of the Plan, the terms of the Plan shall control. |
· | The PSU Award Agreement sets forth the entire understanding between you and the Company regarding the acquisition of Common Stock and supersedes all prior oral and written agreements, promises and/or representations on that subject with the exception of: (i) other equity awards previously granted to you, and (ii) any written employment agreement, offer letter, severance agreement, written severance plan or policy, or other written agreement between the Company and you in each case that specifies the terms that should govern this PSU Award. |
AIRSCULPT TECHNOLOGIES, INC. | PARTICIPANT: | |||
By: | ||||
Signature | Signature | |||
Title: | Date: | |||
Date: |
AIRSCULPT TECHNOLOGIES, INC.
AWARD AGREEMENT
(2021 EQUITY INCENTIVE PLAN)
As reflected by your PSU Award Grant Notice (“Grant Notice”), AirSculpt Technologies, Inc. (the “Company”) has granted you a PSU Award under the AirSculpt Technologies, Inc. 2021 Equity Incentive Plan (the “Plan”), attached hereto as Exhibit A, for the number of performance stock units as indicated in your Grant Notice (the “PSU Award”). The terms of your PSU Award as specified in this Award Agreement for your PSU Award (this “Agreement”) and the Grant Notice constitute your “PSU Award Agreement”. Defined terms not explicitly defined in this Agreement but defined in the Grant Notice or the Plan shall have the same definitions as in the Grant Notice or Plan, as applicable.
The general terms applicable to your PSU Award are as follows:
1. | GOVERNING PLAN DOCUMENT. Your PSU Award is subject to all the provisions of the Plan, including but not limited to the provisions in: |
(a) Section 6 of the Plan regarding the impact of a Capitalization Adjustment, dissolution, liquidation, or Corporate Transaction on your PSU Award;
(b) Section 9(e) of the Plan regarding the Company’s retained rights to terminate your Continuous Service notwithstanding the grant of the PSU Award; and
(c) Section 8 of the Plan regarding the tax consequences of your PSU Award.
Your PSU Award is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the PSU Award Agreement and the provisions of the Plan, the provisions of the Plan shall control.
2. | GRANT OF THE PSU AWARD. This PSU Award represents your right to be issued on a future date the number of shares of the Company’s Common Stock that is equal to the number of performance stock units indicated in the Grant Notice as modified to reflect any Capitalization Adjustment and subject to your satisfaction of the performance conditions set forth therein (the “Performance Stock Units”). Any additional Performance Stock Units that become subject to the PSU Award pursuant to Capitalization Adjustments as set forth in the Plan and the provisions of Section 3 below, if any, shall be subject, in a manner determined by the Board, to the same forfeiture restrictions, restrictions on transferability, and time and manner of delivery as applicable to the other Performance Stock Units covered by your PSU Award. |
3. | DIVIDEND EQUIVALENTS. If cash dividends or other cash distributions are paid in respect of the shares of the Company’s Common Stock underlying unvested Performance Stock Units, then a dividend equivalent equal to the amount paid in respect of one share of Common Stock shall accumulate and be paid with respect to each unvested Performance Stock Units at time of settlement; provided that any dividend equivalent rights granted shall be subject to the same vesting terms as the related Performance Stock Units.. |
4. | WITHHOLDING OBLIGATIONS. As further provided in Section 8 of the Plan, you hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for, any sums required to satisfy the federal, state, local and foreign tax withholding obligations, if any, which arise in connection with your PSU Award (the “Withholding Obligation”) in accordance with the withholding procedures established by the Company. Unless the Withholding Obligation is satisfied, the Company shall have no obligation to deliver to you any Common Stock in respect of the PSU Award. In the event the Withholding Obligation of the Company arises prior to the delivery to you of Common Stock or it is determined after the delivery of Common Stock to you that the amount of the Withholding Obligation was greater than the amount withheld by the Company, you agree to indemnify and hold the Company harmless from any failure by the Company to withhold the proper amount. |
5. | RELEASE AGREEMENT. Any obligation of the Company to deliver to you shares of Common Stock in respect of Performance Stock Units that have vested due to the Accelerated Vesting provision of the Grant Notice, as a result of your termination of employment (or Continuous Service) or achievement of Performance Goals after your termination of employment (or Continuous Service), is conditioned upon you delivering to the Company and not revoking a general release of all claims in the form attached to your employment agreement with the Company (the “Release Agreement”), within 60 days following your termination of employment (the “Release Period”). If the Release Agreement does not become fully effective and irrevocable prior to the expiration of the Release Period, all Performance Stock Units will be forfeited immediately, automatically and without consideration as of the date of your termination of employment (or, as applicable, Continuous Service). |
6. | DATE OF ISSUANCE. |
(a) The issuance of shares in respect of the Performance Stock Units is intended to comply with Treasury Regulations Section 1.409A-1(b)(4) and will be construed and administered in such a manner. Subject to the satisfaction of the Withholding Obligation, if any, in the event that the Performance Goal(s) provided in the Grant Notice have been achieved and one or more Performance Stock Units vests, the Company shall issue to you one (1) share of Common Stock for each Performance Stock Unit that vests during any calendar year in the first calendar quarter of the following calendar year (and no later than March 15th) (subject to any adjustment under Section 3 above, and subject to any different provisions in the Grant Notice or in Section 5 above), subject to your continued employment with the Company on the Original Issuance Date (subject to the Accelerated Vesting provision of the Grant Notice). Each issuance date determined by this paragraph is referred to as an “Original Issuance Date.”
(b) If the Original Issuance Date falls on a date that is not a business day, delivery shall instead occur on the next following business day. In addition, if:
(i) | the Original Issuance Date does not occur (1) during an “open window period” applicable to you, as determined by the Company in accordance with the Company’s then-effective policy on trading in Company securities, or (2) on a date when you are otherwise permitted to sell shares of Common Stock on an established stock exchange or stock market (including but not limited to under a previously established written trading plan that meets the requirements of Rule 10b5-1 under the Exchange Act and was entered into in compliance with the Company’s policies (a “10b5-1 Arrangement”)), and |
(ii) | either (1) a Withholding Obligation does not apply, or (2) the Company decides, prior to the Original Issuance Date, (A) not to satisfy the Withholding Obligation by withholding shares of Common Stock from the shares otherwise due, on the Original Issuance Date, to you under this Award, and (B) not to permit you to enter into a “same day sale” commitment with a broker-dealer (including but not limited to a commitment under a 10b5-1 Arrangement) and (C) not to permit you to pay your Withholding Obligation in cash, |
then the shares that would otherwise be issued to you on the Original Issuance Date will not be delivered on such Original Issuance Date and will instead be delivered on the first business day when you are not prohibited from selling shares of the Company’s Common Stock in the open public market, but in no event later than December 31 of the calendar year in which the Original Issuance Date occurs (that is, the last day of your taxable year in which the Original Issuance Date occurs), or, if and only if permitted in a manner that complies with Treasury Regulations Section 1.409A-1(b)(4), no later than the date that is the 15th day of the third calendar month of the applicable year following the year in which the shares of Common Stock under this Award are no longer subject to a “substantial risk of forfeiture” within the meaning of Treasury Regulations Section 1.409A-1(d).
(c) To the extent the PSU Award is a Non-Exempt Award, the provisions of Section 11 of the Plan shall apply.
7. | LOCK-UP-PERIOD. By accepting your PSU Award, you agree that you will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any shares of Common Stock or other securities of the Company held by you, for a period of one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act or such longer period as the underwriters or the Company will request to facilitate compliance with FINRA Rule 2241 or any successor or similar rules or regulation (the “Lock-Up Period”); provided, however, that nothing contained in this section will prevent the exercise of a repurchase option, if any, in favor of the Company during the Lock-Up Period. You further agree to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriters that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to your shares of Common Stock until the end of such period. You also agree that any transferee of any shares of Common Stock (or other securities) of the Company held by you will be bound by this Section 6. The underwriters of the Company’s stock are intended third party beneficiaries of this Section 6 and will have the right, power and authority to enforce the provisions hereof as though they were a party hereto. |
8. | TRANSFERABILITY. Except as otherwise provided in the Plan, your PSU Award is not transferable, except by will or by the applicable laws of descent and distribution. |
9. | CORPORATE TRANSACTION. Your PSU Award is subject to the terms of any agreement governing a Corporate Transaction involving the Company, including, without limitation, a provision for the appointment of a stockholder representative that is authorized to act on your behalf with respect to any escrow, indemnities and any contingent consideration. |
10. | NO LIABILITIES FOR TAXES. As a condition to accepting the PSU Award, you hereby (a) agree to not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from the PSU Award or other Company compensation and (b) acknowledge that you were advised to consult with your own personal tax, financial and other legal advisors regarding the tax consequences of the PSU Award and have either done so or knowingly and voluntarily declined to do so. |
11. | SEVERABILITY. If any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid. Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid will, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid. |
12. | OTHER DOCUMENTS. You hereby acknowledge receipt of or the right to receive a document providing the information required by Rule 428(b)(1) promulgated under the Securities Act, which includes the Prospectus. In addition, you acknowledge receipt of the Company’s Trading Policy. |
13. | QUESTIONS. If you have questions regarding these or any other terms and conditions applicable to your PSU Award, including a summary of the applicable federal income tax consequences please see the Prospectus. |
Exhibit 10.9
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
AIRSCULPT TECHNOLOGIES, INC.
AND
THE OTHER PARTIES THERETO
dated as of [•], 2021
TABLE OF CONTENTS
Article I EFFECTIVENESS | 1 |
1.1 | Effectiveness | 1 |
Article II DEFINITIONS | 1 |
2.1 | Certain Defined Terms | 1 | |
2.2 | Other Interpretive Provisions | 4 |
Article III REGISTRATION RIGHTS | 4 |
3.1 | Demand Registration Rights | 4 | |
3.2 | Shelf Registration | 6 | |
3.3 | Piggyback Registration Rights | 8 | |
3.4 | Lock-Up Agreements | 9 | |
3.5 | Registration Procedures. | 9 | |
3.6 | Underwritten Offerings. | 13 | |
3.7 | No Inconsistent Agreements; Additional Rights | 14 | |
3.8 | Registration Expenses | 14 | |
3.9 | Indemnification | 15 | |
3.10 | Rules 144 and 144A and Regulation S | 16 | |
3.11 | Existing Registration Statements | 17 |
Article IV MISCELLANEOUS | 17 |
4.1 | Authority: Effect | 17 | |
4.2 | Notices | 17 | |
4.3 | Termination and Effect of Termination | 18 | |
4.4 | Permitted Transferees | 18 | |
4.5 | Remedies | 18 | |
4.6 | Amendments | 18 | |
4.7 | Governing Law | 19 | |
4.8 | Consent to Jurisdiction | 19 | |
4.9 | WAIVER OF JURY TRIAL | 19 | |
4.10 | Merger; Binding Effect, Etc | 19 | |
4.11 | Counterparts | 19 | |
4.12 | Severability | 19 | |
4.13 | No Recourse | 19 |
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This Registration Rights Agreement (as it may be amended from time to time in accordance with the terms hereof, this “Agreement”) is entered as of [•], 2021 by and among AirSculpt Technologies, Inc., a Delaware corporation (the “Company”), and each Person executing this Agreement and listed as an “Investor” on the signature pages hereto (collectively, together with their Permitted Transferees that become party hereto, the “Investors”).
RECITALS
WHEREAS, the Company is contemplating an underwritten initial public offering of shares of its common stock, $0.001 par value per share (“Common Stock”) registered on Form S-1 under the Securities Act (the “IPO”).
WHEREAS, in connection with the IPO, the parties hereto have agreed to set forth their agreements regarding registration rights with respect to the Common Stock and certain other matters following the IPO.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises, covenants and agreements of the parties hereto, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
Article I
EFFECTIVENESS
1.1 Effectiveness. This Agreement shall become effective upon the closing of the IPO.
Article II
DEFINITIONS
2.1 Certain Defined Terms. As used herein, the following terms shall have the following meanings:
“Adverse Disclosure” means public disclosure of material non-public information that, in the good faith judgment of the board of directors of the Company: (i) would be required to be made in any Registration Statement filed with the SEC by the Company so that such Registration Statement, from and after its effective date, does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) would not be required to be made at such time but for the filing, effectiveness or continued use of such Registration Statement; and (iii) the Company has a bona fide business purpose for not disclosing publicly.
“Affiliate” means, with respect to any specified Person, (a) any Person that directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person, (b) a Member of the Immediate Family of such Person, and (c) any investment fund advised or managed by, or under common control or management with, such specified Person; provided that the Company and each of its subsidiaries shall be deemed not to be Affiliates of any Investor. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
“Agreement” shall have the meaning set forth in the preamble.
“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in New York City.
“Common Stock” shall have the meaning set forth in the Recitals.
“Demand Notice” shall have the meaning set forth in Section 3.1.3.
“Demand Registration” shall have the meaning set forth in Section 3.1.1(a).
“Demand Registration Request” shall have the meaning set forth in Section 3.1.1(a).
“Demand Registration Statement” shall have the meaning set forth in Section 3.1.1(c).
“Demand Suspension” shall have the meaning set forth in Section 3.1.6.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.
“FINRA” means the Financial Industry Regulatory Authority.
“Holders” means Investors who then hold Registrable Securities under this Agreement.
“Investor” shall have the meaning set forth in the preamble.
“IPO” shall have the meaning set forth in the Recitals.
“Issuer Free Writing Prospectus” means an issuer free writing prospectus, as defined in Rule 433 under the Securities Act, relating to an offer of the Registrable Securities.
“Loss” shall have the meaning set forth in Section 3.9.1.
“Member of the Immediate Family” means, with respect to any Person who is an individual, (a) each parent, spouse (but not including a former spouse or a spouse from whom such Person is legally separated) or child (including those adopted) of such individual and (b) each trust naming only one or more of the Persons listed in sub-clause (a) as beneficiaries.
“Participation Conditions” shall have the meaning set forth in Section 3.2.5(b).
“Permitted Transferee” means (i) any Affiliate of a Holder and (ii) such other Persons designated by the Holders of a majority of the Registrable Securities under this Agreement.
“Person” means any individual, partnership, corporation, company, association, trust, joint venture, limited liability company, unincorporated organization, entity or division, or any government, governmental department or agency or political subdivision thereof.
“Piggyback Notice” shall have the meaning set forth in Section 3.3.1.
“Piggyback Registration” shall have the meaning set forth in Section 3.3.1.
“Potential Takedown Participant” shall have the meaning set forth in Section 3.2.5(b).
“Pro Rata Portion” means, with respect to each Holder requesting that its shares be registered or sold in an Underwritten Public Offering, a number of such shares equal to the aggregate number of Registrable Securities requested to be registered or sold in such Public Offering (excluding any shares to be registered or sold for the account of the Company) multiplied by a fraction, the numerator of which is the aggregate number of Registrable Securities then held by such Holder, and the denominator of which is the aggregate number of Registrable Securities then held by all Holders requesting that their Registrable Securities be registered or sold.
“Prospectus” means (i) the prospectus included in any Registration Statement, all amendments and supplements to such prospectus, including post-effective amendments and supplements, and all other material incorporated by reference in such prospectus, and (ii) any Issuer Free Writing Prospectus.
“Public Offering” means the offer and sale of Registrable Securities for cash pursuant to an effective Registration Statement under the Securities Act (other than a Registration Statement on Form S-4 or Form S-8 or any successor form).
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“Registrable Securities” means (i) all shares of Common Stock that are not then subject to forfeiture to the Company, (ii) all shares of Common Stock issued or issuable upon exercise, conversion or exchange of any option, warrant or convertible security not then subject to vesting or forfeiture to the Company and (iii) all shares of Common Stock directly or indirectly issued or then issuable with respect to the securities referred to in clauses (i) or (ii) above by way of unit or stock dividend or unit or stock split, or in connection with a combination of units or shares, recapitalization, merger, consolidation or other reorganization. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (w) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such Registration Statement, (x) such securities shall have been Transferred pursuant to Rule 144, (y) such holder is able to immediately sell such securities under Rule 144 without any restrictions on transfer (including without application of paragraphs (c), (d), (e), (f) and (h) of Rule 144), as determined in the reasonable opinion of the holder (it being understood that a written opinion of the Company’s outside legal counsel to the effect that such securities may be so sold removed shall be conclusive evidence this clause has been satisfied), or (z) such securities shall have ceased to be outstanding.
“Registration” means registration under the Securities Act of the offer and sale of shares of Common Stock under a Registration Statement. The terms “register”, “registered” and “registering” shall have correlative meanings.
“Registration Expenses” shall have the meaning set forth in Section 3.8.
“Registration Statement” means any registration statement of the Company filed with, or to be filed with, the SEC under the Securities Act, including the related Prospectus, amendments and supplements to such registration statement, including pre- and post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement other than a registration statement (and related Prospectus) filed on Form S-4 or Form S-8 or any successor form thereto.
“Representatives” means, with respect to any Person, any of such Person’s officers, directors, employees, agents, attorneys, accountants, actuaries, consultants, equity financing partners or financial advisors or other Person associated with, or acting on behalf of, such Person.
“Requisite Investors” means the VSCP Investor and Rollins holding then outstanding Registrable Securities.
“Rollins” means Aaron Rollins, M.D.
“Rule 144” means Rule 144 under the Securities Act (or any successor rule).
“SEC” means the U.S. Securities and Exchange Commission or any successor agency having jurisdiction under the Securities Act.
“Securities Act” means the Securities Act of 1933, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.
“Selling Stockholder Information” shall have the meaning set forth in Section 3.9.1.
“Shelf Period” shall have the meaning set forth in Section 3.2.3.
“Shelf Registration” shall have the meaning set forth in Section 3.2.1(a).
“Shelf Registration Notice” shall have the meaning set forth in Section 3.2.2.
“Shelf Registration Request” shall have the meaning set forth in Section 3.2.1(a).
“Shelf Registration Statement” shall have the meaning set forth in Section 3.2.1(a).
“Shelf Suspension” shall have the meaning set forth in Section 3.2.4.
“Shelf Takedown Notice” shall have the meaning set forth in Section 3.2.5(b).
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“Shelf Takedown Request” shall have the meaning set forth in Section 3.2.5(a).
“Transfer” means, with respect to any Registrable Security, any interest therein, or any other securities or equity interests relating thereto, a direct or indirect transfer, sale, exchange, assignment, pledge, hypothecation or other encumbrance or other disposition thereof, including the grant of an option or other right, whether directly or indirectly, whether voluntarily, involuntarily, by operation of law, pursuant to judicial process or otherwise. “Transferred” shall have a correlative meaning.
“Underwritten Public Offering” means an underwritten Public Offering, including any bought deal or block sale to a financial institution conducted as an underwritten Public Offering.
“Underwritten Shelf Takedown” means an Underwritten Public Offering pursuant to an effective Shelf Registration Statement.
“VSCP Investor” means, collectively, VSCP EBS Aggregator, LP, VSCP EBS Blocker, Inc., EBS Aggregator, LLC, EBS Aggregator Blocker, Inc., EBS Aggregator Blocker Holdings, LLC, Vesey Street Capital Partners Healthcare Fund, LP, Vesey Street Capital Partners Healthcare Fund-A, LP or any Affilicate of VSCP.
“WKSI” means any Securities Act registrant that is a well-known seasoned issuer as defined in Rule 405 under the Securities Act at the most recent eligibility determination date specified in paragraph (2) of that definition.
2.2 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.
(b) The words “hereof,” “herein,” “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and any subsection and section references are to this Agreement unless otherwise specified.
(c) The term “including” is not limiting and means “including without limitation.”
(d) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.
(e) Whenever the context requires, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms.
Article III
REGISTRATION RIGHTS
The Company will perform and comply, and cause each of its subsidiaries to perform and comply, with such of the following provisions as are applicable to it. Each Holder will perform and comply with such of the following provisions as are applicable to such Holder.
3.1 Demand Registration Rights.
3.1.1 Request for Demand Registration.
(a) Following the consummation of the IPO, each Requisite Investor shall have the right to make a written request from time to time (a “Demand Registration Request”) to the Company for Registration of all or part of the Registrable Securities held by such Holder. Any such Registration pursuant to a Demand Registration Request shall hereinafter be referred to as a “Demand Registration.”
(b) Each Demand Registration Request shall specify (i) the aggregate amount of Registrable Securities to be registered, and (ii) the intended method or methods of disposition thereof.
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(c) Upon receipt of a Demand Registration Request, the Company shall as promptly as practicable file a Registration Statement (a “Demand Registration Statement”) relating to such Demand Registration, and use its reasonable best efforts to cause such Demand Registration Statement to be promptly declared effective under the Securities Act.
3.1.2 Limitation on Demand Registrations. The Company shall not be obligated to take any action to effect any Demand Registration if a Demand Registration or Piggyback Registration was declared effective or an Underwritten Shelf Takedown was consummated within the preceding 90 days.
3.1.3 Demand Notice. Promptly upon receipt of a Demand Registration Request pursuant to Section 3.1.1 (but in no event more than three Business Days thereafter), the Company shall deliver a written notice (a “Demand Notice”) of any such Demand Registration Request to all other Holders and the Demand Notice shall offer each such Holder the opportunity to include in the Demand Registration that number of Registrable Securities as each such Holder may request in writing. Subject to Section 3.1.7, Company shall include in the Demand Registration all such Registrable Securities with respect to which the Company has received written requests for inclusion therein within three Business Days after the date that the Demand Notice was delivered.
3.1.4 Demand Withdrawal. Each Requisite Investor that has requested the inclusion of Registrable Securities in a Demand Registration pursuant to Section 3.1.3 may withdraw all or any portion of its Registrable Securities included in a Demand Registration from such Demand Registration at any time prior to the effectiveness of the applicable Demand Registration Statement. Upon receipt of a notice to such effect with respect to all of the Registrable Securities included in such Demand Registration by such Requisite Investors, the Company shall cease all efforts to secure effectiveness of the applicable Demand Registration Statement. Any such withdrawn Demand Registration Statement shall count as a Demand Registration with respect to any participating Requisite Investor unless such Requisite Investor reimburses the Company its pro rata portion (based on shares requested to be included in such Registration) of the Registration Expenses incurred prior to the withdrawal.
3.1.5 Effective Registration. The Company shall use reasonable best efforts to cause the Demand Registration Statement to become effective and remain effective for not less than 180 days (or such shorter period as will terminate when all Registrable Securities covered by such Demand Registration Statement have been sold or withdrawn), or, if such Demand Registration Statement relates to an Underwritten Public Offering, such longer period as in the opinion of counsel for the underwriter or underwriters a Prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer.
3.1.6 Delay in Filing; Suspension of Registration. If the filing, initial effectiveness or continued use of a Demand Registration Statement at any time would require the Company to make an Adverse Disclosure, the Company may, upon giving prompt written notice of such action to the Holders, delay the filing or initial effectiveness of, or suspend use of, the Demand Registration Statement (a “Demand Suspension”); provided, however, that the Company shall not be permitted to exercise a Demand Suspension (i) more than twice during any 12-month period, (ii) for a period exceeding 60 days on any one occasion or (iii) for an aggregate of more than 90 days in any 12-month period. In the case of a Demand Suspension, the Holders agree to suspend use of the applicable Prospectus in connection with any sale or purchase, or offer to sell or purchase, Registrable Securities, upon receipt of the notice referred to above. The Company shall immediately notify the Holders in writing upon the termination of any Demand Suspension, amend or supplement the Prospectus, if necessary, so it does not contain any untrue statement or omission and furnish to the Holders such numbers of copies of the Prospectus as so amended or supplemented as the Holders may reasonably request. The Company shall, if necessary, supplement or amend the Demand Registration Statement, if required by the registration form used by the Company for the Demand Registration or by the instructions applicable to such registration form or by the Securities Act or the rules or regulations promulgated thereunder or as may reasonably be requested by the Holders of a majority of Registrable Securities that are included in such Demand Registration Statement.
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3.1.7 Priority of Securities Registered Pursuant to Demand Registrations. If the managing underwriter or underwriters of a proposed Underwritten Public Offering of the Registrable Securities included in a Demand Registration, advise the Company in writing that, in its or their opinion, the number of securities requested to be included in such Demand Registration exceeds the number that can be sold in such offering without being likely to have an adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, then the securities to be included in such Registration shall be in the case of any Demand Registration (x) first, allocated to each Holder that has requested to participate in such Demand Registration an amount equal to the lesser of (i) the number of such Registrable Securities requested to be registered or sold by such Holder, and (ii) a number of such shares equal to such Holder’s Pro Rata Portion, and (y) second, and only if all the securities referred to in clause (x) have been included, the number of other securities that, in the opinion of such managing underwriter or underwriters can be sold without having such adverse effect.
3.1.8 Resale Rights. In the event that an Investor requests to participate in a Registration pursuant to this Section 3.1 in connection with a distribution of Registrable Securities to its partners or members, the Registration shall provide for resale by such partners or members, if requested by such Investor.
3.2 Shelf Registration.
3.2.1 Request for Shelf Registration.
(a) At such time as the Company is eligible to file a Registration Statement on Form S-3, upon the written request of any Requisite Investor from time to time (a “Shelf Registration Request”), the Company shall promptly file with the SEC a shelf Registration Statement pursuant to Rule 415 under the Securities Act (“Shelf Registration Statement”) relating to the offer and sale of Registrable Securities by any Holders thereof from time to time in accordance with the methods of distribution elected by such Holders and the Company shall use its reasonable best efforts to cause such Shelf Registration Statement to promptly become effective under the Securities Act. Any such Registration pursuant to a Shelf Registration Request shall hereinafter be referred to as a “Shelf Registration.”
(b) If on the date of the Shelf Registration Request the Company is a WKSI, then the Shelf Registration Request may request Registration of an unspecified amount of Registrable Securities to be sold by unspecified Holders. If on the date of the Shelf Registration Request the Company is not a WKSI, then the Shelf Registration Request shall specify the aggregate amount of Registrable Securities to be registered. The Company shall provide to the Holders the information necessary to determine the Company’s status as a WKSI upon request.
3.2.2 Shelf Registration Notice. Promptly upon receipt of a Shelf Registration Request (but in no event more than three Business Days thereafter (or such shorter period as may be reasonably requested in connection with an underwritten “block trade”), the Company shall deliver a written notice (a “Shelf Registration Notice”) of any such request to all other Holders, which notice shall specify, if applicable, the amount of Registrable Securities to be registered, and the Shelf Registration Notice shall offer each such Holder the opportunity to include in the Shelf Registration that number of Registrable Securities as each such Holder may request in writing. The Company shall include in such Shelf Registration all such Registrable Securities with respect to which the Company has received written requests for inclusion therein within three Business Days (or such shorter period as may be reasonably requested in connection with an underwritten “block trade”) after the date that the Shelf Registration Notice has been delivered.
3.2.3 Continued Effectiveness. The Company shall use its reasonable best efforts to keep such Shelf Registration Statement continuously effective under the Securities Act in order to permit the Prospectus forming part of the Shelf Registration Statement to be usable by Holders until the earlier of: (i) the date as of which all Registrable Securities have been sold pursuant to the Shelf Registration Statement or another Registration Statement filed under the Securities Act (but in no event prior to the applicable period referred to in Section 4(a)(3) of the Securities Act and Rule 174 thereunder); and (ii) the date as of which no Holder holds Registrable Securities (such period of effectiveness, the “Shelf Period”). Subject to Section 3.2.4, the Company shall be deemed not to have used its reasonable best efforts to keep the Shelf Registration Statement effective during the Shelf Period if the Company voluntarily takes any action or omits to take any action that would result in Holders of the Registrable Securities covered thereby not being able to offer and sell any Registrable Securities pursuant to such Shelf Registration Statement during the Shelf Period, unless such action or omission is required by applicable law.
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3.2.4 Suspension of Registration. If the continued use of such Shelf Registration Statement at any time would require the Company to make an Adverse Disclosure, the Company may, upon giving prompt written notice of such action to the Holders, suspend use of the Shelf Registration Statement (a “Shelf Suspension”); provided, however, that the Company shall not be permitted to exercise a Shelf Suspension more than (i) more than twice during any 12-month period, (ii) for a period exceeding 60 days on any one occasion or (iii) for an aggregate of more than 90 days in any 12-month period. In the case of a Shelf Suspension, the Holders agree to suspend use of the applicable Prospectus in connection with any sale or purchase of, or offer to sell or purchase, Registrable Securities, upon receipt of the notice referred to above. The Company shall immediately notify the Holders in writing upon the termination of any Shelf Suspension, amend or supplement the Prospectus, if necessary, so it does not contain any untrue statement or omission and furnish to the Holders such numbers of copies of the Prospectus as so amended or supplemented as the Holders may reasonably request. The Company shall, if necessary, supplement or amend the Shelf Registration Statement, if required by the registration form used by the Company for the Shelf Registration Statement or by the instructions applicable to such registration form or by the Securities Act or the rules or regulations promulgated thereunder or as may reasonably be requested by the Holders of a majority of Registrable Securities that are included in such Shelf Registration Statement.
3.2.5 Shelf Takedown.
(a) At any time the Company has an effective Shelf Registration Statement with respect to Registrable Securities, by notice to the Company specifying the intended method or methods of disposition thereof, any Requisite Investor may make a written request (a “Shelf Takedown Request”) to the Company to effect a Public Offering, including an Underwritten Shelf Takedown, of all or a portion of such Holder’s Registrable Securities that are registered on such Shelf Registration Statement, and as soon as practicable the Company shall amend or supplement the Shelf Registration Statement as necessary for such purpose. No Holder, other than a Requisite Investor, may effect a Public Offering pursuant to this Section 3.2, except pursuant to Section 3.2.5(b) as a Potential Takedown Participant.
(b) Promptly upon receipt of a Shelf Takedown Request (but in no event more than three Business Days thereafter (or such shorter period as may be reasonably requested in connection with an underwritten “block trade”) for any Underwritten Shelf Takedown, the Company shall deliver a notice (a “Shelf Takedown Notice”) to each other Holder with Registrable Securities covered by the applicable Registration Statement, or to all other Holders if such Registration Statement is undesignated (each a “Potential Takedown Participant”). The Shelf Takedown Notice shall offer each such Potential Takedown Participant the opportunity to include in any Underwritten Shelf Takedown such number of Registrable Securities as each such Potential Takedown Participant may request in writing. The Company shall include in the Underwritten Shelf Takedown all such Registrable Securities with respect to which the Company has received written requests for inclusion therein within three Business Days (or such shorter period as may be reasonably requested in connection with an underwritten “block trade”) after the date that the Shelf Takedown Notice has been delivered. Any Potential Takedown Participant’s request to participate in an Underwritten Shelf Takedown shall be binding on the Potential Takedown Participant; provided that each such Potential Takedown Participant that elects to participate may condition its participation on the Underwritten Shelf Takedown being completed within ten Business Days of its acceptance at a price per share (after giving effect to any underwriters’ discounts or commissions) to such Potential Takedown Participant of not less than ninety percent (90%) (or such lesser percentage specified by such Potential Takedown Participant) of the closing price for the shares on their principal trading market on the Business Day immediately prior to such Potential Takedown Participant’s election to participate (the “Participation Conditions”). Notwithstanding the delivery of any Shelf Takedown Notice, but subject to the Participation Conditions (to the extent applicable), all determinations as to whether to complete any Underwritten Shelf Takedown and as to the timing, manner, price and other terms of any Underwritten Shelf Takedown contemplated by this Section 3.2.5 shall be determined by the initiating Requisite Investors.
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(c) The Company shall not be obligated to take any action to effect any Underwritten Shelf Takedown if a Demand Registration or Piggyback Registration was declared effective or an Underwritten Shelf Takedown was consummated within the preceding 90 days.
3.2.6 Priority of Securities Sold Pursuant to Shelf Takedowns. If the managing underwriter or underwriters of a proposed Underwritten Shelf Takedown pursuant to Section 3.2.5 advise the Company in writing that, in its or their opinion, the number of securities requested to be included in the proposed Underwritten Shelf Takedown exceeds the number that can be sold in such Underwritten Shelf Takedown without being likely to have an adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, the number of Registrable Securities to be included in such offering shall be (x) first, allocated to each Holder that has requested to participate in such Underwritten Shelf Takedown an amount equal to the lesser of (i) the number of such Registrable Securities requested to be registered or sold by such Holder, and (ii) a number of such shares equal to such Holder’s Pro Rata Portion, and (y) second, and only if all the securities referred to in clause (x) have been included, the number of other securities that, in the opinion of such managing underwriter or underwriters can be sold without having such adverse effect.
3.2.7 Resale Rights. In the event that an Investor elects to request a Registration pursuant to this Section 3.2 in connection with a distribution of Registrable Securities to its partners or members, the Registration shall provide for resale by such partners or members, if requested by such Investor.
3.3 Piggyback Registration Rights.
3.3.1 Participation. If the Company at any time proposes to file a Registration Statement under the Securities Act or to conduct a Public Offering with respect to any offering of its equity securities for its own account or for the account of any other Persons (other than (i) a Registration under Sections 3.1 or 3.2, (ii) a Registration on Form S-4 or Form S-8 or any successor form to such forms or (iii) a Registration of securities solely relating to an offering and sale to employees or directors of the Company or its subsidiaries pursuant to any employee stock plan, employee stock purchase plan, dividend reinvestment program or other employee benefit plan arrangement), then, as soon as practicable (but in no event less than ten Business Days prior to the proposed date of filing of such Registration Statement or, in the case of a Public Offering under a Shelf Registration Statement, the anticipated pricing or trade date), the Company shall give written notice (a “Piggyback Notice”) of such proposed filing or Public Offering to all Holders, and such Piggyback Notice shall offer the Holders the opportunity to register under such Registration Statement, or to sell in such Public Offering, such number of Registrable Securities as each such Holder may request in writing (a “Piggyback Registration”). Subject to Section 3.3.2, the Company shall include in such Registration Statement or in such Public Offering as applicable, all such Registrable Securities that are requested to be included therein within five Business Days after the receipt by such Holder of any such notice; provided, however, that if at any time after giving written notice of its intention to register or sell any securities and prior to the effective date of the Registration Statement filed in connection with such Registration, or the pricing or trade date of a Public Offering under a Shelf Registration Statement, the Company determines for any reason not to register or sell or to delay Registration or the sale of such securities, the Company shall give written notice of such determination to each Holder and, thereupon, (i) in the case of a determination not to register or sell, shall be relieved of its obligation to register or sell any Registrable Securities in connection with such Registration or Public Offering (but not from its obligation to pay the Registration Expenses in connection therewith), without prejudice, however, to the rights of any Holders entitled to request that such Registration or sale be effected as a Demand Registration under Section 3.1 or an Underwritten Shelf Takedown under Section 3.2, as the case may be, and (ii) in the case of a determination to delay Registration or sale, in the absence of a request for a Demand Registration or an Underwritten Shelf Takedown, as the case may be, shall also be permitted to delay registering or selling any Registrable Securities. Any Holder shall have the right to withdraw all or part of its request for inclusion of its Registrable Securities in a Piggyback Registration by giving written notice to the Company of its request to withdraw.
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3.3.2 Priority of Piggyback Registration. If the managing underwriter or underwriters of any proposed offering of Registrable Securities included in a Piggyback Registration informs the Company and the participating Holders in writing that, in its or their opinion, the number of securities that such Holders and any other Persons intend to include in such offering exceeds the number that can be sold in such offering without being likely to have a significant adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, then the securities to be included in such Registration shall be (i) first, 100% of the securities that the Company proposes to sell, and (ii) second, and only if all the securities referred to in clause (i) have been included, the number of Registrable Securities that, in the opinion of such managing underwriter or underwriters, can be sold without having such adverse effect, with such number to be allocated among the Holders that have requested to participate in such Registration based on an amount equal to the lesser of (i) the number of such Registrable Securities requested to be sold by such Holder, and (ii) a number of such shares equal to such Holder’s Pro Rata Portion and (iii) third, and only if all of the Registrable Securities referred to in clause (ii) have been included in such Registration, any other securities eligible for inclusion in such Registration.
3.3.3 No Effect on Other Registrations. No Registration of Registrable Securities effected pursuant to a request under this Section 3.3 shall be deemed to have been effected pursuant to Sections 3.1 and 3.2 or shall relieve the Company of its obligations under Sections 3.1 and 3.2.
3.4 Lock-Up Agreements. In connection with each Registration or sale of Registrable Securities pursuant to Section 3.1, 3.2 or 3.3 conducted as an Underwritten Public Offering, each Holder agrees, if requested, to become bound by and to execute and deliver a lock-up agreement with the underwriter(s) of such Public Offering restricting such Holder’s right to (a) Transfer, directly or indirectly, any equity securities of the Company held by such Holder or (b) enter into any swap or other arrangement that transfers to another any of the economic consequences of ownership of such securities during the period commencing on the date of the final Prospectus relating to such Public Offering and ending on the date specified by the underwriters (such period not to exceed 90 days plus such additional period as may be requested by the Company or an underwriter due to regulatory restrictions on the publication or other distribution of research reports and analyst recommendations and opinions, if applicable). The terms of such lock-up agreements shall be negotiated among the Requisite Investors, the Company and the underwriters and shall include customary carve-outs from the restrictions on Transfer set forth therein.
3.5 Registration Procedures.
3.5.1 Requirements. In connection with the Company’s obligations under Sections 3.1, 3.2 and 3.3, the Company shall use its reasonable best efforts to effect such Registration and to permit the sale of such Registrable Securities in accordance with the intended method or methods of distribution thereof as expeditiously as reasonably practicable, and in connection therewith the Company shall:
(a) as promptly as practicable, prepare the required Registration Statement, including all exhibits and financial statements required under the Securities Act to be filed therewith and Prospectus, and, before filing a Registration Statement or Prospectus or any amendments or supplements thereto, (x) furnish to the underwriters, if any, and to the Holders of the Registrable Securities covered by such Registration Statement, copies of all documents prepared to be filed, which documents shall be subject to the review of such underwriters and such Holders and their respective counsel, (y) make such changes in such documents concerning the Holders prior to the filing thereof as such Holders, or their counsel, may reasonably request and (z) except in the case of a Registration under Section 3.3, not file any Registration Statement or Prospectus or amendments or supplements thereto to which the participating Holders, in such capacity, or the underwriters, if any, shall reasonably object;
(b) prepare and file with the SEC such amendments and post-effective amendments to such Registration Statement and supplements to the Prospectus as may be (x) reasonably requested by any participating Holder with Registrable Securities covered by such Registration Statement, (y) reasonably requested by any participating Holder (to the extent such request relates to information relating to such Holder), or (z) necessary to keep such Registration Statement effective for the period of time required by this Agreement, and comply with provisions of the applicable securities laws with respect to the sale or other disposition of all securities covered by such Registration Statement during such period in accordance with the intended method or methods of disposition by the sellers thereof set forth in such Registration Statement;
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(c) notify the participating Holders and the managing underwriter or underwriters, if any, and (if requested) confirm such notice in writing and provide copies of the relevant documents, as soon as reasonably practicable after notice thereof is received by the Company (a) when the applicable Registration Statement or any amendment thereto has been filed or becomes effective, and when the applicable Prospectus or any amendment or supplement thereto has been filed, (b) of any written comments by the SEC, or any request by the SEC or other federal or state governmental authority for amendments or supplements to such Registration Statement or such Prospectus, or for additional information (whether before or after the effective date of the Registration Statement) or any other correspondence with the SEC relating to, or which may affect, the Registration, (c) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or any order by the SEC or any other regulatory authority preventing or suspending the use of any preliminary or final Prospectus or the initiation or threatening of any proceedings for such purposes, (d) if, at any time, the representations and warranties of the Company in any applicable underwriting agreement cease to be true and correct in all material respects and (e) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;
(d) promptly notify each selling Holder and the managing underwriter or underwriters, if any, when the Company becomes aware of the happening of any event as a result of which the applicable Registration Statement or the Prospectus included in such Registration Statement (as then in effect) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein (in the case of such Prospectus or any preliminary Prospectus, in light of the circumstances under which they were made) not misleading, when any Issuer Free Writing Prospectus includes information that may conflict with the information contained in the Registration Statement, or, if for any other reason it shall be necessary during such time period to amend or supplement such Registration Statement or Prospectus in order to comply with the Securities Act and, as promptly as reasonably practicable thereafter, prepare and file with the SEC, and furnish without charge to the selling Holders and the managing underwriter or underwriters, if any, an amendment or supplement to such Registration Statement or Prospectus, which shall correct such misstatement or omission or effect such compliance;
(e) to the extent the Company is eligible under the relevant provisions of Rule 430B under the Securities Act, if the Company files any Shelf Registration Statement, the Company shall include in such Shelf Registration Statement such disclosures as may be required by Rule 430B under the Securities Act (referring to the unnamed selling security holders in a generic manner by identifying the initial offering of the securities to the Holders) in order to ensure that the Holders may be added to such Shelf Registration Statement at a later time through the filing of a Prospectus supplement rather than a post-effective amendment;
(f) prevent, or obtain the withdrawal of, any stop order or other order or notice preventing or suspending the use of any preliminary or final Prospectus;
(g) promptly incorporate in a Prospectus supplement, Issuer Free Writing Prospectus or post-effective amendment such information as the managing underwriter or underwriters and the participating Requisite Investors agree should be included therein relating to the plan of distribution with respect to such Registrable Securities; and make all required filings of such Prospectus supplement, Issuer Free Writing Prospectus or post-effective amendment as soon as reasonably practicable after being notified of the matters to be incorporated in such Prospectus supplement, Issuer Free Writing Prospectus or post-effective amendment;
(h) furnish to each selling Holder and each underwriter, if any, without charge, as many conformed copies as such Holder or underwriter may reasonably request of the applicable Registration Statement and any amendment or post-effective amendment or supplement thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference);
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(i) deliver to each selling Holder and each underwriter, if any, without charge, as many copies of the applicable Prospectus (including each preliminary Prospectus) and any amendment or supplement thereto and such other documents as such Holder or underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities by such Holder or underwriter (it being understood that the Company shall consent to the use of such Prospectus or any amendment or supplement thereto by each of the selling Holders and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto);
(j) on or prior to the date on which the applicable Registration Statement becomes effective, use its reasonable best efforts to register or qualify, and cooperate with the selling Holders, the managing underwriter or underwriters, if any, and their respective counsel, in connection with the Registration or qualification of such Registrable Securities for offer and sale under the securities or “Blue Sky” laws of each state and other jurisdiction as any such selling Holder or managing underwriter or underwriters, if any, or their respective counsel reasonably request in writing and do any and all other acts or things reasonably necessary or advisable to keep such Registration or qualification in effect for such period as required by Section 3.1 or Section 3.2, as applicable, provided that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to taxation or general service of process in any such jurisdiction where it is not then so subject;
(k) cooperate with the selling Holders and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may request prior to any sale of Registrable Securities to the underwriters;
(l) cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter or underwriters, if any, to consummate the disposition of such Registrable Securities;
(m) make such representations and warranties to the Holders being registered, and the underwriters or agents, if any, in form, substance and scope as are customarily made by issuers in public offerings similar to the offering then being undertaken
(n) enter into such customary agreements (including underwriting and indemnification agreements) and take all such other actions as the participating Requisite Investors or the managing underwriter or underwriters, if any, reasonably request in order to expedite or facilitate the Registration and disposition of such Registrable Securities;
(o) obtain for delivery to the Holders being registered and to the underwriter or underwriters, if any, an opinion or opinions from counsel for the Company dated the most recent effective date of the Registration Statement or, in the event of an Underwritten Public Offering, the date of the closing under the underwriting agreement, in customary form, scope and substance, which opinions shall be reasonably satisfactory to such Holders or underwriters, as the case may be, and their respective counsel;
(p) in the case of an Underwritten Public Offering, obtain for delivery to the Company and the managing underwriter or underwriters, with electronic copies to the Holders included in such Registration or sale, a comfort letter from the Company’s independent certified public accountants or independent auditors (and, if necessary, any other independent certified public accountants or independent auditors of any subsidiary of the Company or any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement) in customary form and covering such matters of the type customarily covered by comfort letters as the managing underwriter or underwriters reasonably request, dated the date of execution of the underwriting agreement and brought down to the closing under the underwriting agreement;
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(q) cooperate with each seller of Registrable Securities and each underwriter, if any, participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA;
(r) comply with all applicable securities laws and, if a Registration Statement was filed, make available to its security holders, as soon as reasonably practicable, an earnings statement satisfying the provisions of Section 11(a) of the Securities Act and the rules and regulations promulgated thereunder;
(s) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by the applicable Registration Statement;
(t) cause all Registrable Securities covered by the applicable Registration Statement to be listed on each securities exchange on which any of the Company’s equity securities are then listed or quoted and on each inter-dealer quotation system on which any of the Company’s equity securities are then quoted;
(u) make available upon reasonable notice at reasonable times and for reasonable periods for inspection by a representative appointed by the participating Requisite Investors, by any underwriter participating in any disposition to be effected pursuant to such Registration Statement and by any attorney, accountant or other agent retained by such Holders or any such underwriter, all pertinent financial and other records and pertinent corporate documents and properties of the Company, and cause all of the Company’s officers, directors and employees and the independent public accountants who have certified its financial statements to make themselves available to discuss the business of the Company and to supply all information reasonably requested by any such Person in connection with such Registration Statement;
(v) in the case of an Underwritten Public Offering, cause the senior executive officers of the Company to participate in the customary “road show” presentations that may be reasonably requested by the managing underwriter or underwriters in any such offering and otherwise to facilitate, cooperate with, and participate in each proposed offering contemplated herein and customary selling efforts related thereto;
(w) take no direct or indirect action prohibited by Regulation M under the Exchange Act;
(x) take all reasonable action to ensure that any Issuer Free Writing Prospectus utilized in connection with any Registration complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related Prospectus, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and
(y) take all such other commercially reasonable actions as are necessary or advisable in order to expedite or facilitate the disposition of such Registrable Securities in accordance with the terms of this Agreement.
3.5.2 Company Information Requests. The Company may require each seller of Registrable Securities as to which any Registration or sale is being effected to furnish to the Company such information regarding the distribution of such securities and such other information relating to such Holder and its ownership of Registrable Securities as the Company may from time to time reasonably request in writing and the Company may exclude from such Registration or sale the Registrable Securities of any such Holder who unreasonably fails to furnish such information within a reasonable time after receiving such request. Each Holder agrees to furnish such information to the Company and to cooperate with the Company as reasonably necessary to enable the Company to comply with the provisions of this Agreement.
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3.5.3 Discontinuing Registration. Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.5.1(d), such Holder will discontinue disposition of Registrable Securities pursuant to such Registration Statement until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3.5.1(d), or until such Holder is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus, or any amendments or supplements thereto, and if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company shall give any such notice, the period during which the applicable Registration Statement is required to be maintained effective shall be extended by the number of days during the period from and including the date of the giving of such notice to and including the date when each seller of Registrable Securities covered by such Registration Statement either receives the copies of the supplemented or amended Prospectus contemplated by Section 3.5.1(d) or is advised in writing by the Company that the use of the Prospectus may be resumed.
3.6 Underwritten Offerings.
3.6.1 Shelf and Demand Registrations. If requested by the underwriters for any Underwritten Public Offering, pursuant to a Registration or sale under Sections 3.1 or 3.2, the Company shall enter into an underwriting agreement with such underwriters, such agreement to be reasonably satisfactory in substance and form to each of the Company, the participating Requisite Investors and the underwriters, and to contain such representations and warranties by the Company and such other terms as are generally prevailing in agreements of that type, including indemnities no less favorable to the recipient thereof than those provided in Section 3.9. The Holders of the Registrable Securities proposed to be distributed by such underwriters shall cooperate with the Company in the negotiation of the underwriting agreement and shall give consideration to the reasonable suggestions of the Company regarding the form thereof, and such Holders shall complete and execute all questionnaires, powers of attorney and other documents reasonably requested by the underwriters and required under the terms of such underwriting arrangements. Any such Holder shall not be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Holder, such Holder’s title to the Registrable Securities, such Holder’s intended method of distribution and any other representations to be made by the Holder as are generally prevailing in agreements of that type, and the aggregate amount of the liability of such Holder under such agreement shall not exceed such Holder’s proceeds from the sale of its Registrable Securities in the offering, net of underwriting discounts and commissions but before expenses.
3.6.2 Piggyback Registrations. If the Company proposes to register or sell any of its securities under the Securities Act as contemplated by Section 3.3 and such securities are to be distributed through one or more underwriters, the Company shall, if requested by any Holder pursuant to Section 3.3 and, subject to the provisions of Section 3.3.2, use its reasonable best efforts to arrange for such underwriters to include on the same terms and conditions that apply to the other sellers in such Registration or sale all the Registrable Securities to be offered and sold by such Holder among the securities of the Company to be distributed by such underwriters in such Registration or sale. The Holders of Registrable Securities to be distributed by such underwriters shall be parties to the underwriting agreement between the Company and such underwriters and shall complete and execute all questionnaires, powers of attorney and other documents reasonably requested by the underwriters and required under the terms of such underwriting arrangements. Any such Holder shall not be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Holder, such Holder’s title to the Registrable Securities, such Holder’s intended method of distribution and any other representations to be made by the Holder as are generally prevailing in agreements of that type, and the aggregate amount of the liability of such Holder shall not exceed such Holder’s proceeds from the sale of its Registrable Securities in the offering, net of underwriting discounts and commissions but before expenses.
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3.6.3 Selection of Underwriters; Selection of Counsel. In the case of an Underwritten Public Offering under Sections 3.1 or 3.2, the managing underwriter or underwriters to administer the offering shall be determined by the Investors, or, if not participating, by any other Requisite Investor; provided that such underwriter or underwriters shall be reasonably acceptable to the Company. In the case of an Underwritten Public Offering under Section 3.3, the managing underwriter or underwriters to administer the offering shall be determined by the Company; provided that such underwriter or underwriters shall be reasonably acceptable to the Holders of a majority of the Registrable Securities being sold. In the case of an Underwritten Public Offering under Sections 3.1, 3.2 or 3.3, legal counsel for Investor shall be selected by the Investor and legal counsel for the other Holders shall be selected by participating Holders holding a majority of the Registrable Securities proposed to be included in the Public Offering.
3.7 No Inconsistent Agreements; Additional Rights. Neither the Company nor any of its subsidiaries shall hereafter enter into, and neither the Company nor any of its subsidiaries is currently a party to, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders by this Agreement. Neither the Company nor any of its subsidiaries shall enter into any agreement granting registration or similar rights to any Person, and the Company hereby represents and warrants that, as of the date hereof, no registration or similar rights have been granted to any other Person other than pursuant to this Agreement.
3.8 Registration Expenses. All expenses incident to the Company’s performance of or compliance with this Agreement shall be paid by the Company, including (i) all registration and filing fees, and any other fees and expenses associated with filings required to be made with the SEC or FINRA, (ii) all fees and expenses in connection with compliance with any securities or “Blue Sky” laws (including reasonable fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities), (iii) all printing, duplicating, word processing, messenger, telephone and delivery expenses (including expenses of printing certificates for the Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing Prospectuses), (iv) all fees and disbursements of counsel for the Company and of all independent certified public accountants or independent auditors of the Company and any subsidiaries of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance), (v) Securities Act liability insurance or similar insurance if the Company so desires or the underwriters so require in accordance with then-customary underwriting practice, (vi) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange or quotation of the Registrable Securities on any inter-dealer quotation system, (vii) all reasonable fees and disbursements of legal counsel for the Investors and for other Holders, with one counsel for such other Holders, (vii) all fees and expenses of any special experts or other Persons retained by the Company in connection with any Registration or sale, (ix) all of the Company’s internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties) and (x) all expenses related to the “road show” for any Underwritten Public Offering (including the reasonable out-of-pocket expenses of the Holders and underwriters, if so requested. All such expenses are referred to herein as “Registration Expenses”. The Company shall not be required to pay any fees and disbursements to underwriters not customarily paid by the issuers of securities in an offering similar to the applicable offering, including underwriting discounts and commissions and transfer taxes, if any, attributable to the sale of Registrable Securities.
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3.9 Indemnification.
3.9.1 Indemnification by the Company. The Company shall indemnify and hold harmless, to the full extent permitted by law, each Holder, each shareholder, member, limited or general partner of such Holder, each shareholder, member, limited or general partner of each such shareholder, member, limited or general partner, each of their respective Affiliates, officers, directors, shareholders, employees, advisors, and agents and each Person who controls (within the meaning of the Securities Act or the Exchange Act) such Persons and each of their respective Representatives from and against any and all losses, penalties, judgments, suits, costs, claims, damages, liabilities and expenses, joint or several (including reasonable costs of investigation and legal expenses) (each, a “Loss” and collectively “Losses”) arising out of or based upon (i) any untrue or alleged untrue statement of a material fact contained in any Registration Statement under which such Registrable Securities are registered or sold under the Securities Act (including any final, preliminary or summary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein) or any other disclosure document produced by or on behalf of the Company or any of its subsidiaries including any report and other document filed under the Exchange Act, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus or preliminary Prospectus, in light of the circumstances under which they were made) not misleading or (iii) any violation or alleged violation by the Company or any of its subsidiaries of any federal, state, foreign or common law rule or regulation applicable to the Company or any of its subsidiaries and relating to action or inaction in connection with any such registration, disclosure document or other document or report; provided, that no selling Holder shall be entitled to indemnification pursuant to this Section 3.9.1 in respect of any untrue statement or omission contained in any information relating to such selling Holder furnished in writing by such selling Holder to the Company specifically for inclusion in a Registration Statement and used by the Company in conformity therewith (such information, “Selling Stockholder Information”). This indemnity shall be in addition to any liability the Company may otherwise have. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any indemnified party and shall survive the Transfer of such securities by such Holder and regardless of any indemnity agreed to in the underwriting agreement that is less favorable to the Holders. The Company shall also indemnify underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, their officers and directors and each Person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent as provided above (with appropriate modification) with respect to the indemnification of the indemnified parties.
3.9.2 Indemnification by the Selling Holders. To the extent permitted by law, each selling Holder agrees (severally and not jointly) to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors and officers and each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act) from and against any Losses resulting from (i) any untrue statement of a material fact in any Registration Statement under which such Registrable Securities were registered or sold under the Securities Act (including any final, preliminary or summary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein) or (ii) any omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus or preliminary Prospectus, in light of the circumstances under which they were made) not misleading, in each case to the extent, but only to the extent, that such untrue statement or omission is contained in such selling Holder’s Selling Stockholder Information. In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the proceeds from the sale of its Registrable Securities in the offering giving rise to such indemnification obligation, net of underwriting discounts and commissions but before expenses, less any amounts paid by such Holder pursuant to Section 3.9.4 and any amounts paid by such Holder as a result of liabilities incurred under the underwriting agreement, if any, related to such sale.
3.9.3 Conduct of Indemnification Proceedings. Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that any delay or failure to so notify the indemnifying party shall relieve the indemnifying party of its obligations hereunder only to the extent, if at all, that it is actually and materially prejudiced by reason of such delay or failure) and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided, however, that any Person entitled to indemnification hereunder shall have the right to select and employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such Person unless (i) the indemnifying party has agreed in writing to pay such fees or expenses, (ii) the indemnifying party shall have failed to assume the defense of such claim within a reasonable time after receipt of notice of such claim from the Person entitled to indemnification hereunder and employ counsel reasonably satisfactory to such Person, (iii) the indemnified party has reasonably concluded (based upon advice of its counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, or (iv) in the reasonable judgment of any such Person (based upon advice of its counsel) a conflict of interest may exist between such Person and the indemnifying party with respect to such claims (in which case, if the Person notifies the indemnifying party in writing that such Person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such Person). If the indemnifying party assumes the defense, the indemnifying party shall not have the right to settle such action without the prior written consent of the indemnified party. No indemnifying party shall consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of an unconditional release from all liability in respect to such claim or litigation without the prior written consent of such indemnified party. If such defense is not assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its prior written consent, but such consent may not be unreasonably withheld. It is understood that the indemnifying party or parties shall not, except as specifically set forth in this Section 3.9.3, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements or other charges of more than one separate firm admitted to practice in such jurisdiction at any one time unless (x) the employment of more than one counsel has been authorized in writing by the indemnifying party or parties, (y) an indemnified party has reasonably concluded (based on the advice of counsel) that there may be legal defenses available to it that are different from or in addition to those available to the other indemnified parties or (z) a conflict or potential conflict exists or may exist (based upon advice of counsel to an indemnified party) between such indemnified party and the other indemnified parties, in each of which cases the indemnifying party shall be obligated to pay the reasonable fees and expenses of such additional counsel or counsels.
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3.9.4 Contribution. If for any reason the indemnification provided for in Section 3.9.1 and Section 3.9.2 is unavailable to an indemnified party or insufficient in respect of any Losses referred to therein (other than as a result of exceptions or limitations on indemnification contained in Section 3.9.1 and Section 3.9.2), then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party or parties on the other hand in connection with the acts, statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations. In connection with any Registration Statement filed with the SEC by the Company, the relative fault of the indemnifying party on the one hand and the indemnified party on the other hand shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just or equitable if contribution pursuant to this Section 3.9.4 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 3.9.4. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The amount paid or payable by an indemnified party as a result of the Losses referred to in Sections 3.9.1 and 3.9.2 shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 3.9.4, in connection with any Registration Statement filed by the Company, a selling Holder shall not be required to contribute any amount in excess of the dollar amount of the proceeds from the sale of its Registrable Securities in the offering giving rise to such contribution obligation, net of underwriting discounts and commissions but before expenses, less any amounts paid by such Holder pursuant to Section 3.9.2 and any amounts paid by such Holder as a result of liabilities incurred under the underwriting agreement, if any, related to such sale. If indemnification is available under this Section 3.9, the indemnifying parties shall indemnify each indemnified party to the full extent provided in Sections 3.9.1 and 3.9.2 hereof without regard to the provisions of this Section 3.9.4. The remedies provided for in this Section 3.9 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.
3.10 Rules 144 and 144A and Regulation S. The Company shall file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Holder, make publicly available such necessary information for so long as necessary to permit sales that would otherwise be permitted by this Agreement pursuant to Rule 144, Rule 144A or Regulation S under the Securities Act, as such rules may be amended from time to time or any similar rule or regulation hereafter adopted by the SEC), and it will take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without Registration under the Securities Act in transactions that would otherwise be permitted by this Agreement and within the limitation of the exemptions provided by (i) Rule 144, Rule 144A or Regulation S under the Securities Act, as such rules may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements and, if not, the specifics thereof.
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3.11 Existing Registration Statements. Notwithstanding anything herein to the contrary and subject to applicable law and regulation, the Company may satisfy any obligation hereunder to file a Registration Statement or to have a Registration Statement become effective by a specified date by designating, by notice to the Holders, a Registration Statement that previously has been filed with the SEC or become effective, as the case may be, as the relevant Registration Statement for purposes of satisfying such obligation, and all references to any such obligation shall be construed accordingly; provided that such previously filed Registration Statement may be, and is, amended or, subject to applicable securities laws, supplemented to add the number of Registrable Securities, and, to the extent necessary, to identify as selling stockholders those Holders demanding the filing of a Registration Statement pursuant to the terms of this Agreement. To the extent this Agreement refers to the filing or effectiveness of other Registration Statements, by or at a specified time and the Company has, in lieu of then filing such Registration Statements or having such Registration Statements become effective, designated a previously filed or effective Registration Statement as the relevant Registration Statement for such purposes, in accordance with the preceding sentence, such references shall be construed to refer to such designated Registration Statement, as amended or supplemented in the manner contemplated by the immediately preceding sentence.
Article IV
MISCELLANEOUS
4.1 Authority: Effect. Each party hereto represents and warrants to and agrees with each other party that the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized on behalf of such party and do not violate any agreement or other instrument applicable to such party or by which its assets are bound. This Agreement does not, and shall not be construed to, give rise to the creation of a partnership among any of the parties hereto, or to constitute any of such parties members of a joint venture or other association. The Company and its subsidiaries shall be jointly and severally liable for all obligations of each such party pursuant to this Agreement.
4.2 Notices. Any notices, requests, demands and other communications required or permitted in this Agreement shall be effective if in writing and (i) delivered personally, (ii) sent by facsimile or e-mail, or (iii) sent by overnight courier, in each case, addressed as follows:
If to the Company:
Airsculpt Technologies, Inc.
400 Alton Road, Unit TH-103M
Miami Beach, FL 33129
Email: arollins@elitebodysculpture.com
Attention: Dr. Aaron Rollins
with a copy to:
McDermott Will & Emery LLP
500 North Capital Street, NW
Washington, DC 20001-1531
Email: tconaghan@mwe.com
Attention: Thomas Conaghan
If to an Investor:
c/o Vesey Street Capital Partners,
LLC
428 Greenwich Street, Townhouse
New York, NY 10013
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Email: dsollof@vscpllc.com
Attention: Daniel Sollof
with a copy to:
McDermott Will & Emery LLP
500 North Capital Street, NW
Washington, DC 20001-1531
Email: tconaghan@mwe.com
Attention: Thomas Conaghan
Notice to the holder of record of any shares of capital stock shall be deemed to be notice to the holder of such shares for all purposes hereof.
Unless otherwise specified herein, such notices or other communications shall be deemed effective (i) on the date received, if personally delivered, (ii) on the date received if delivered by facsimile or e-mail on a Business Day, or if not delivered on a Business Day, on the first Business Day thereafter and (iii) three Business Days after being sent by overnight courier. Each of the parties hereto shall be entitled to specify a different address by giving notice as aforesaid to each of the other parties hereto.
4.3 Termination and Effect of Termination. This Agreement shall terminate upon the date on which no Holder holds any Registrable Securities, except for the provisions of Sections 3.9 and 3.10, which shall survive any such termination. No termination under this Agreement shall relieve any Person of liability for breach or Registration Expenses incurred prior to termination. In the event this Agreement is terminated, each Person entitled to indemnification rights pursuant to Section 3.9 hereof shall retain such indemnification rights with respect to any matter that (i) may be an indemnified liability thereunder and (ii) occurred prior to such termination.
4.4 Permitted Transferees. The rights of a Holder hereunder may be assigned (but only with all related obligations as set forth below) in connection with a Transfer of Registrable Securities to a Permitted Transferee of that Holder. Without prejudice to any other or similar conditions imposed hereunder with respect to any such Transfer, no assignment permitted under the terms of this Section 4.4 will be effective unless the Permitted Transferee to which the assignment is being made, if not a Holder, has delivered to the Company a written acknowledgment and agreement in form and substance reasonably satisfactory to the Company that the Permitted Transferee will be bound by, and will be a party to, this Agreement. A Permitted Transferee to whom rights are transferred pursuant to this Section 4.4 may not again transfer those rights to any other Permitted Transferee, other than as provided in this Section 4.4.
4.5 Remedies. The parties to this Agreement shall have all remedies available at law, in equity or otherwise in the event of any breach or violation of this Agreement or any default hereunder. The parties acknowledge and agree that in the event of any breach of this Agreement, in addition to any other remedies that may be available, each of the parties hereto shall be entitled to specific performance of the obligations of the other parties hereto and, in addition, to such other equitable remedies (including preliminary or temporary relief) as may be appropriate in the circumstances. No delay of or omission in the exercise of any right, power or remedy accruing to any party as a result of any breach or default by any other party under this Agreement shall impair any such right, power or remedy, nor shall it be construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later; nor shall any such delay, omission nor waiver of any single breach or default be deemed a waiver of any other breach or default occurring before or after that waiver.
4.6 Amendments. This Agreement may not be orally amended, modified, extended or terminated, nor shall any oral waiver of any of its terms be effective. This Agreement may be amended, modified, extended or terminated, and the provisions hereof may be waived, only by an agreement in writing signed by the Company and the Holders of a majority of the Registrable Securities under this Agreement, which must include the Investor for as long as such Investor holds Registrable Securities; provided, however, that any amendment, modification, extension or termination that disproportionately and adversely affects any Holder shall require the prior written consent of such Holder. Each such amendment, modification, extension or termination shall be binding upon each party hereto. In addition, each party hereto may waive any right hereunder by an instrument in writing signed by such party.
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4.7 Governing Law. This Agreement and all claims arising out of or based upon this Agreement or relating to the subject matter hereof shall be governed by and construed in accordance with the domestic substantive laws of the State of New York without giving effect to any choice or conflict of laws provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction.
4.8 Consent to Jurisdiction. Each party to this Agreement, by its execution hereof, (i) hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of New York for the purpose of any action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation arising out of or based upon this Agreement or relating to the subject matter hereof, (ii) hereby waives to the extent not prohibited by applicable law, and agrees not to assert, and agrees not to allow any of its subsidiaries to assert, by way of motion, as a defense or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such proceeding brought in one of the above-named courts is improper, or that this Agreement or the subject matter hereof or thereof may not be enforced in or by such court and (iii) hereby agrees not to commence or maintain any action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation arising out of or based upon this Agreement or relating to the subject matter hereof or thereof other than before one of the above-named courts nor to make any motion or take any other action seeking or intending to cause the transfer or removal of any such action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation to any court other than one of the above-named courts whether on the grounds of inconvenient forum or otherwise. Notwithstanding the foregoing, to the extent that any party hereto is or becomes a party in any litigation in connection with which it may assert indemnification rights set forth in this Agreement, the court in which such litigation is being heard shall be deemed to be included in clause (i) above. Notwithstanding the foregoing, any party to this Agreement may commence and maintain an action to enforce a judgment of any of the above-named courts in any court of competent jurisdiction. Each party hereto hereby consents to service of process in any such proceeding in any manner permitted by New York law, and agrees that service of process by registered or certified mail, return receipt requested, at its address specified pursuant to Section 4.2 hereof is reasonably calculated to give actual notice.
4.9 WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THIS SECTION 4.9 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 4.9 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
4.10 Merger; Binding Effect, Etc. This Agreement constitutes the entire agreement of the parties with respect to its subject matter, supersedes all prior or contemporaneous oral or written agreements or discussions with respect to such subject matter, and shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective heirs, representatives, successors and permitted assigns. Except as otherwise expressly provided herein, no Holder or other party hereto may assign any of its respective rights or delegate any of its respective obligations under this Agreement without the prior written consent of the other parties hereto, and any attempted assignment or delegation in violation of the foregoing shall be null and void.
4.11 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one instrument. Counterpart signature pages to this Agreement may be delivered by facsimile or electronic delivery (i.e., by email of a PDF signature page) and each such counterpart signature page will constitute an original for all purposes.
4.12 Severability. In the event that any provision hereof would, under applicable law, be invalid or unenforceable in any respect, such provision shall be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable law. The provisions hereof are severable, and in the event any provision hereof should be held invalid or unenforceable in any respect, it shall not invalidate, render unenforceable or otherwise affect any other provision hereof.
4.13 No Recourse. Notwithstanding anything that may be expressed or implied in this Agreement, the Company and each Holder covenant, agree and acknowledge that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement shall be had against any current or future director, officer, employee, general or limited partner or member of any Holder or of any Affiliate or assignee thereof, as such, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any current or future officer, agent or employee of any Holder or any current or future member of any Holder or any current or future director, officer, employee, partner or member of any Holder or of any Affiliate or assignee thereof, as such, for any obligation of any Holder under this Agreement or any documents or instruments delivered in connection with this Agreement for any claim based on, in respect of or by reason of such obligations or their creation.
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IN WITNESS WHEREOF, each of the undersigned has duly executed this Agreement as of the date first above written.
AIRSCULPT TECHNOLOGIES, INC. |
By: | ||
Name: | ||
Title: |
VSCP EBS AGGREGATOR, LP |
By: Vesey Street Capital Partners Healthcare GP, L.P., its General Partner |
By: Vesey Street Capital Partners Healthcare UGP, L.P., its General Partner |
By: | ||
Name: | ||
Title: |
Name: Aaron Rollins, M.D. |
[Signature Page to the Registration Rights Agreement]
EXHIBIT 10.10
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is entered into by and between EBS Enterprises, LLC (“EBS Enterprises”), a Delaware limited liability company and Mr. Ron Zelhof (“Executive”), and shall be effective immediately following the time, and subject to, AirSculpt Technologies, Inc.’s (“AirSculpt” and together with EBS Enterprises, “Company”) registration statement on Form S-1 related to its initial public offering being declared effective (the “IPO”) by the Securities and Exchange Commission (the “Effective Date”).
WITNESSETH:
WHEREAS, Executive and EBS Enterprises previously entered into an Employment Agreement effective as of December 1, 2018 (the “Prior Agreement”);
WHEREAS, in connection with AirSculpt’s IPO it is anticipated that EBS Enterprises will become a wholly-owned subsidiary of AirSculpt;
WHEREAS, in connection with, and subject to the occurrence of, the IPO, Executive and Company desire to amend and restate the Prior Agreement;
WHEREAS, Company desires to continue to employ Executive as Chief Operating Officer of Company in accordance with the terms and conditions of this Agreement; and
WHEREAS, Executive desires to continue to serve as Chief Operating Officer of Company in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and obligations hereinafter set forth, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Employment and Acceptance. During the Term (as defined in Section 3 below), Company shall employ Executive, and Executive shall continue to serve Company, subject to the terms of this Agreement. If, for any reason, an IPO does not occur prior to January 1, 2022, then this Agreement will not be effective and will be null and void, and the Prior Agreement will be reinstated with full force and effect.
2. Title; Duties and Obligations; Location.
2.1 Title. Company shall employ Executive to render services to Company. Executive shall serve in the capacity of Chief Operating Officer of Company.
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2.2 Best Efforts/Duties. The duties and responsibilities of Executive shall include such duties and responsibilities as assigned by the Chief Executive Officer and Company’s Board of Directors (the “Board”) from time to time consistent with the position of Chief Operating Officer. Executive shall perform faithfully and diligently all such duties assigned to Executive. Company reserves the right to modify Executive’s position and duties at any time in its sole and absolute discretion; provided, that such position and the duties assigned are consistent with the position of a Chief Operating Officer or higher level of authority or prestige. In Executive’s capacity as Chief Operating Officer of Company, Executive shall report to, and be subject to the lawful direction of, the Chief Executive Officer. Executive will expend Executive’s best efforts on behalf of Company, and will abide by all policies of Company applicable to Company’s executives generally and all decisions made by the Board, all in accordance with applicable federal, state and local laws, regulations or ordinances. Executive will act in the best interest of Company at all times in carrying out his duties and responsibilities under this Agreement. Except as permitted under subsections 2.5 (i) and (ii) below, Executive shall devote Executive’s full business efforts to the performance, to the best of his ability, experience and talent, of Executive’s assigned duties for Company.
2.3 Other Positions. In addition to serving in the capacity of Chief Operating Officer of Company, Executive also may serve in such other executive-level positions or capacities as may, from time to time, be reasonably requested by the Board, including, without limitation (subject to election, appointment, re-election or re-appointment, as applicable) as an officer of any of Company’s subsidiaries and/or affiliates, in each case, for no additional compensation.
2.4 Compliance with Company Policies. Subject to Section 6 hereof, during the Term, Executive shall be in conformance and comply with all Company written or established policies, rules and regulations governing the conduct of its employees, now in effect, or as subsequently adopted or amended to the extent such policies are in accordance with applicable federal, state and local laws, regulations and ordinances.
2.5 Time Commitment. During the Term, Executive shall use his best efforts to promote the interests of Company (and, to the extent he serves one or more subsidiaries and/or affiliates pursuant to Section 2.3 hereof, its applicable subsidiaries or affiliates) and, except as provided in subsections (i) and (ii) below, shall devote all of his business time to the performance of his duties for Company (and, to the extent he serves one or more subsidiaries or affiliates pursuant to Section 2.3 hereof, its applicable subsidiaries or affiliates) and, shall not, directly or indirectly, render any services to any other person or organization, whether for compensation or otherwise, except with the Board’s prior written consent (which shall not be unreasonably withheld): provided, that nothing in this Agreement shall prevent Executive from (i) participating in charitable, civic, educational, professional, community or industry non-profit associations and organizations and (ii) managing Executive’s passive personal investments, so long as such activities described in clauses (i) and (ii) do not, individually or in the aggregate, materially interfere or conflict with Executive’s duties hereunder, create a business or fiduciary conflict or violate the Employee Covenants Agreement by and between Executive and EBS Enterprises, LLC dated of December 1, 2018 (the “Covenant Agreement”) (in each case, as determined by the Board). Notwithstanding the foregoing, the Board will review the activities in clauses (i) and (ii) of the preceding sentence on an ongoing basis and reserves the right to prohibit any such activities that it determines in good faith materially interfere with performance of Executive’s duties hereunder, and will provide Executive with written notice of such determination. If the Board so prohibits such activities, Executive will be given a commercially reasonable period of time to extract himself from such activities, during which time he will not be considered in breach of this Agreement.
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2.6 Location. Executive’s services shall be performed principally at Company’s principal office located in Miami, Florida. However, from time to time, Executive may be required by his job responsibilities to travel on Company business, and Executive agrees to do so. Executive’s work schedule shall be determined and managed by Executive in his sole discretion, provided, however, Executive performs all duties necessary in his capacity as the Company’s Chief Operating Officer.
3. Term. The employment relationship pursuant to this Agreement shall commence on the Effective Date and continue until terminated in accordance with Section 7 below (such period of the employment relationship shall be referred to herein as the “Term”). For avoidance of doubt, Executive’s employment shall be “at-will” and may be terminated by either party at any time in accordance with the terms of this Agreement.
4. Compensation. For the services rendered by Executive in any capacity under this Agreement during the Term (including, without limitation, serving as an officer, director or member of any committee of the Board), Executive shall be compensated as follows (subject, in each case, to the provisions of Section 4 below):
4.1 Base Salary. As compensation for Executive’s performance of Executive’s duties hereunder, beginning as of the Effective Date, Company shall pay to Executive a salary at the annualized rate of $575,000, payable in substantially equal installments in accordance with Company’s normal payroll practices as in effect from time to time. The salary may be reviewed annually by the Board or a committee thereof and may be increased, but not decreased, unless such decrease is agreed to by Executive. As used herein Executive’s “Salary” shall be his salary as in effect from time to time after any such adjustments. Company shall deduct from each such installment all amounts required to be deducted or withheld under applicable law or under any employee benefit plan or program in which Executive participates.
4.2 Annual Bonus. In addition to the Salary, Executive shall be eligible for an annual target cash performance bonus of 75% of Executive’s Salary (the “Bonus”) for each fiscal year during the Term (beginning in fiscal year 2019), based upon achievement of individual and/or Company performance criteria, as determined annually by the Board in its sole and absolute discretion. Any Bonus for a fiscal year to the extent earned, shall be paid in a lump sum at a time established by the Board but no later than March 15 of the calendar year immediately following the last day of the fiscal year to which the Bonus relates. Executive must be actively employed with Company at the time of such payment in order to receive the Bonus for that immediately preceding fiscal year.
4.3 IPO Cash Bonus. In connection with, and subject to the occurrence of, the IPO, Executive shall be eligible to receive a one-time lump sum cash payment in the amount of $4,750,000 upon the successful completion of the IPO (the “IPO Cash Bonus”). The IPO cash bonus shall be paid as soon as reasonably practicable following the IPO and no later than March 15 of the calendar year immediately following the last day of the calendar year in which the successful completion of the IPO occurs. Executive must be actively employed with Company through the occurrence of the IPO in order to receive the IPO Cash Bonus.
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4.4 Initial Equity Award. As soon as reasonably practicable after the Effective Date, Executive will be granted an equity award in respect of the number of shares of common stock equal to 1.75% of the common stock of AirSculpt outstanding upon effectiveness of AirSculpt’s registration statement on Form S-1 related to the IPO (the “Initial Equity Award”), excluding the underwriter’s overallotment. The Initial Equity Award shall consist of 50% restricted stock units and 50% performance-based restricted stock units; which awards shall be substantially consistent with the forms of award agreement attached as Exhibit B and Exhibit C hereto. All equity grants are subject to the approval of the Board.
4.5 Annual Equity Awards. Executive will be eligible to participate in the Company’s annual equity grant program. Executive’s first annual equity grant will be awarded in the first quarter of calendar year 2022 (the “Annual Equity Award”). The Annual Equity Award may be granted in any form allowed under the Company’s 2021 Equity Incentive Plan with vesting terms and conditions as set forth by the Board in its sole and absolute discretion. Each Annual Equity Award shall be subject to the terms and conditions of the applicable grant agreement. All equity grants are subject to the approval of the Board.
5. Benefits.
5.1 Customary Benefits. Executive will be eligible for all customary and usual retirement and welfare benefits (excluding, for the avoidance of doubt, bonus plans not expressly referred to in this Agreement and severance plans/programs/policies, if any) generally available to executives of Company, subject to the terms and conditions of such benefit plans. Company reserves the right to change or eliminate benefits on a prospective basis, at any time and from time to time.
5.2 Paid Time Off. Executive shall be entitled to paid vacation, holidays, personal days and sick leave in accordance with the policies, programs and practices of Company in effect from time to time, but in no event less than four (4) weeks per calendar year (pro-rated for any partial years). Such vacation shall be taken at such intervals as shall be appropriate and consistent with the proper performance of Executive’s duties hereunder.
6. Business Expenses. Company shall reimburse Executive during the Term, for all reasonable out-of-pocket business expenses incurred by Executive in the performance of his duties hereunder consistent with level and the manner Executive has historically received such reimbursement and otherwise in accordance with the Company’s expense reimbursement policies as in effect from time to time, provided, that in the event of a conflict between Executive’s historic business reimbursement practices and the Company’s reimbursement policies, the historic business reimbursement practices shall govern. In order to receive such reimbursement, Executive shall furnish to Company documentary evidence of each such expense in the form required to comply with Company’s policies.
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7. Termination of Executive’s Employment.
7.1 Termination for Cause by Company. Although Company anticipates a mutually rewarding employment relationship with Executive, Company may terminate Executive’s employment immediately at any time for Cause. For purposes of this Agreement, “Cause” is defined as: (i) fraud, embezzlement or other misappropriation by Executive of funds or property of Company or any of its subsidiaries or affiliates (collectively, the “Company Group”, and each, a “Company Group Member”) or any Persons or professionals for which Company or its subsidiaries or affiliates provides business, management, administrative, marketing or other support services, including but not limited to Elite Body Sculpture, P.C., Madison Avenue Medical PLLC, EBS Illinois, LLC, EBS - Texas, LLC, EBS Georgia, LLC and any other corporation, limited liability company, partnership or association that is party to a management services agreement or similar agreement with Company or any of Company’s subsidiaries or affiliates for the rendering of certain management services and other related services by Company or any of Company’s subsidiaries or affiliates (each, a “Managed Practice” and collectively, “Managed Practices”); (ii) any gross misconduct by Executive that is injurious, directly or indirectly, in any material respect to any Company Group Member or any Managed Practice; (iii) Executive’s failure to perform, or breach of, in any material respect, any of his obligations under this Agreement or the Covenant Agreement or any other agreement or contract between Executive and any Company Group Member; (iv) Executive’s exclusion, debarment, termination or suspension under any Medicare, Medicaid, TRICARE or other federal, state or government health care program, or commission or conviction of, indictment for or plea of guilty or no-contest to, any felony or any crime involving moral turpitude, embezzlement, fraud or self-dealing or any crime which could reasonably be expected to subject Executive, any Company Group Member, services or Managed Practices to exclusion, debarment, termination or suspension under any Medicare, Medicaid, TRICARE or other federal, state or government health care program; (v) Executive’s use of alcohol or controlled substances that significantly impairs his ability to perform his duties and responsibilities with respect to any Company Group Member or Managed Practices in any material respect; (vi) Executive challenging the legality, validity or enforceability of any of the Managed Practice documents; (vii) termination by a Managed Practice owned or controlled by Executive of a managed services agreement with any Company Group Member for reasons other than a material breach of such agreement by the Company Group Member (viii) the willful breach by a Managed Practice owned or controlled by Executive of a management services agreement with any Company Group Member; or (ix) Executive’s failure to give timely notice of his resignation under Section 7.4.
In the event Executive’s employment is terminated in accordance with this Section 7.1, Company shall pay the following amounts to Executive within the time period required by applicable law:
(i) any accrued but unpaid Salary (as determined pursuant to Section 4.1 hereof) for services rendered prior to the date of Executive’s termination of employment (the “Termination Date”), which accrued but unpaid Salary shall be paid on or before the time required by law;
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(ii) payment for any accrued but unused paid time off;
(iii) expenses reimbursable under Section 6 hereof incurred prior to the Termination Date but not yet reimbursed, which reimbursable (but not yet reimbursed) expenses, if any, shall (subject to Executive’s timely submission of invoices) be paid on or before the time required by law; and
(iv) vested entitlements under any other Company benefit plan or program (with the exception of those, if any, relating to severance) that Executive is otherwise entitled to receive under such plan, program, policy or practice on the Termination Date, in each case, in accordance with (and subject to the terms, conditions and limitations set forth in) such plan, program, policy, or practice.
The amounts described in clauses (i) through (iv) above shall be referred to herein as the “Accrued Obligations.” All other Company obligations to Executive pursuant to this Agreement will become automatically terminated and completely extinguished.
7.2 Termination Without Cause by Company/Termination by Executive For Good Reason. Company may terminate Executive’s employment under this Agreement without Cause with ninety (90) days written notice to Executive, or Executive may resign with Good Reason subject to the notification requirements and the Cure Period (as defined below), in each case as set forth below. In the event of such termination, Executive will receive:
(i) The Accrued Obligations and any Bonus earned in respect of a prior completed year that has not yet been paid; and
(ii) Subject to Section 7.6, a payment in the aggregate amount equal to the sum of one-and-a-half (1.5) multiplied by the sum of (x) Executive’s annual Salary (at the rate as of the Termination Date) plus (y) Executive’s target Bonus, payable (less applicable withholdings and deductions) in a lump sum on the next regular pay date of Company following the date that the Release becomes effective and is no longer subject to revocation, in accordance with Company’s then-current payroll practices, but in no event later than March 15 of the calendar year immediately following the calendar year in which the Termination Date occurs. The payment referred to in this clause (ii), is referred to as the “Severance Payment.”
For purposes of this Agreement, “Good Reason” is defined as any one or more of the following without Executive’s prior written consent:
(a) a material reduction of Executive’s title, authority, duties or responsibilities with Company;
(b) a material reduction in Executive’s Salary;
(c) relocation of Executive’s principal place of work to a place more than twenty-five (25) miles from the Company’s headquarters in Miami, Florida as of the date hereof, unless such relocation is otherwise agreed to in writing by Executive; or
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(d) a material breach by the Company of this Agreement.
Notwithstanding the foregoing, Good Reason shall not exist unless Executive notifies Company in writing of the existence of the applicable condition specified above not later than thirty (30) days after the initial existence of the condition, and Company fails to remedy such condition within fifteen (15) days after receipt of such notice (the “Cure Period”); provided, however, that if Company cannot remedy such condition within such fifteen (15) day period for reasons outside of Company’s reasonable control, as determined by the Board in its sole and absolute discretion, the Cure Period shall be extended to provide an additional period to remedy such condition, which extension shall not in any case exceed fifteen (15) calendar days. In the event Company fails to remedy the condition constituting Good Reason during the applicable Cure Period (after giving effect to any extension of the Cure Period), Executive’s resignation for Good Reason must occur, if at all, within thirty (30) calendar days following the expiration of the Cure Period.
7.3 Termination of Employment due to Executive’s death or Disability. Executive’s employment under this Agreement shall terminate automatically upon Executive’s death. Company may terminate Executive’s employment under this Agreement due to Executive’s Disability (as defined below). In the event of such termination, Executive (or Executive’s estate, as the case may be) will be entitled to receive, the Accrued Obligations, and any Bonus earned in respect of a prior completed year that has not yet been paid, and no other amount, except as required by applicable law.
All other Company obligations to Executive pursuant to this Agreement will be automatically terminated and completely extinguished. For purposes of this Agreement “Disability” means Executive’s physical or mental illness, injury or infirmity which prevents Executive from performing Executive’s material duties for a period of (A) one-hundred and eighty (180) consecutive calendar days or (B) an aggregate of ninety (90) calendar days out of any consecutive six (6) month period.
7.4 Voluntary Resignation by Executive Without Good Reason. Executive may voluntarily resign Executive’s position with Company without Good Reason at any time, upon sixty (60) days’ advance written notice. The effectiveness of any such voluntary resignation may be accelerated by Company in its sole and absolute discretion. In the event of such termination or resignation, Executive will be entitled to the Accrued Obligations and no other amount, except as required by applicable law.
7.5 Removal from any Boards and Positions. If Executive’s employment is terminated for any reason, Executive shall automatically, without further action, notice or deed, be deemed to resign from any position with any Company Group Member, including, but not limited to, as an officer of any Company Group Member.
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7.6 Release. In order to receive the Severance Payments, Executive must timely execute (and not revoke) a separation agreement and general release (the “Release”) in substantially the form attached hereto as Exhibit A within sixty (60) days of the Termination Date, and (ii) Executive’s non-revocation of such Release. Notwithstanding anything to the contrary contained in this Agreement, (i) Company’s obligations to provide the Severance Payments will immediately cease if Executive is in breach of the Covenant Agreement in any material respect and fails to cure such breach (if curable) within fifteen (15) days after receipt of notice of such breach from the Company, and (ii) in the event that Executive fails to timely cure such breach of the Covenant Agreement, then upon demand by Company, Executive shall immediately repay to Company the amount of any Severance Payments previously paid.
8. Non-contravention. Executive hereby represents to Company that the execution and delivery of this Agreement by Executive and Company and the performance by Executive of Executive’s duties hereunder shall not constitute a breach of, or otherwise contravene, or be prevented, interfered with or hindered by, the terms of any employment agreement or other agreement or policy to which Executive is a party or otherwise bound, and further that Executive is not subject to any limitation on his activities on behalf of the Company Group Member as a result of agreements into which Executive has entered.
9. General Provisions.
9.1 Successors and Assigns. The rights and obligations of Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Company. Executive shall not be entitled to assign any of Executive’s rights or obligations under this Agreement.
9.2 Waiver. Any provision of this Agreement may be waived if, and only if, such waiver is in writing and signed by the party against whom the waiver is to be effective. No failure or delay by any party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege, and no waiver in any one instance shall be effective with respect to any other instance or create a course of dealing.
9.3 Attorneys’ Fees. Company and Executive shall bear their own costs, fees and expenses in connection with the negotiation, preparation and execution of this Agreement.
9.4 Key-Man Insurance. Upon Company’s request, Executive shall cooperate (including, without limitation, taking any required physical examinations) in all respects in obtaining a key-man life and/or long-term disability insurance policy with respect to Executive in which Company (or any subsidiary or affiliate) is named as the beneficiary.
9.5 Legal Counsel. Executive acknowledges and warrants that (i) he has been advised that Executive’s interests may be different from Company’s interests, (ii) he has been afforded a reasonable opportunity to review this Agreement, to understand its terms and to discuss it with an attorney and/or financial advisor of his choice and (iii) he knowingly and voluntarily entered into this Agreement. Company and Executive shall each bear their own costs and expenses in connection with the negotiation and execution of this Agreement.
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9.6 Severability. In the event any provision of this Agreement is found to be unenforceable by a court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the parties shall receive the benefits contemplated herein to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of such court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.
9.7 Interpretation; Construction. The headings set forth in this Agreement and the division of this Agreement into sections and subsections are for convenience only and shall not be used in interpreting this Agreement. This Agreement has been drafted by legal counsel representing Company, but Executive has participated in the negotiation of its terms. Furthermore, Executive acknowledges that Executive has reviewed and revised this Agreement and had it reviewed by legal counsel and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.
9.8 Governing Law; Jurisdiction. Any and all actions or controversies arising out of this Agreement, Executive’s employment by Company or the termination thereof, including, without limitation, breach of contract and tort claims, shall be construed and enforced in accordance with the internal laws of the State of Florida, without regard to any choice of law or conflicting provision or rule (whether of the State of Florida or any other jurisdiction) that would cause the laws of any jurisdiction other than the State of Florida to be applied. Any and all actions arising out of this Agreement or Executive’s employment by Company or the termination thereof shall be brought and heard in the state and federal courts located in the Florida, and the parties hereto hereby irrevocably submit to the exclusive jurisdiction of any such courts. COMPANY AND EXECUTIVE HEREBY WAIVE THEIR RESPECTIVE RIGHT TO TRIAL BY JURY IN ANY ACTION CONCERNING THIS AGREEMENT OR ANY AND ALL MATTERS ARISING DIRECTLY OR INDIRECTLY HEREFROM AND REPRESENT THAT THEY HAVE CONSULTED WITH COUNSEL OF THEIR CHOICE SPECIFICALLY WITH RESPECT TO THIS WAIVER.
9.9 Remedies Cumulative. All remedies provided in this Agreement are cumulative and in addition to all other remedies which may be available at law or in equity.
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9.10 Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, faxed, or sent by nationally recognized overnight courier service (with next business day delivery requested), or sent by electronic mail, provided, that the submission by electronic mail is promptly confirmed by telephone confirmation thereof or followed by one of the other foregoing permitted means of notice. Any such notice or communication shall be deemed given and effective, in the case of personal delivery, upon receipt by the other party, in the case of faxed or notice by email, upon transmission of the fax or email, in the case of a courier service, upon the next business day, after dispatch of the notice or communication. Any such notice or communication shall be addressed as follows:
If to Company, to:
AirSculpt Technologies, Inc.
400 Alton Road, Unit TH-103M
Miami Beach, FL 33129
Email: | [__________] |
Attn: | Aaron Rollins, M.D. |
with a copy to:
McDermott
Will & Emery LLP
500 North Capital Street, NW
Washington, DC 20001-1531
Email: | tconaghan@mwe.com |
Attn: | Thomas Conaghan |
If to Executive, to him at the offices of Company with a copy to him at his home address as set forth in the records of Company.
9.11 Survival. Notwithstanding anything herein to the contrary, each provision of this Agreement shall survive the termination of this Agreement for any reason or Executive’s ceasing to provide services to Company to the extent necessary to give effect to its terms, including, without limitation, Sections 8, 9, 10, 11, 12, and 13 of this Agreement.
9.12 Counterparts. This Agreement may be executed in any number of counterparts and each such duplicate counterpart shall constitute an original, any one of which may be introduced in evidence or used for any other purpose without the production of its duplicate counterpart. Moreover, notwithstanding that any of the parties did not execute the same counterpart, each counterpart shall be deemed for all purposes to be an original, and all such counterparts shall constitute one and the same instrument, binding on all of the parties hereto.
9.13 Defend Trade Secrets Act. Executive acknowledges receipt of the following notice under the Defend Trade Secrets Act: An individual will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret if he/she (i) makes such disclosure in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney and such disclosure is made solely for the purpose of reporting or investigating a suspected violation of law; or (ii) such disclosure was made in a complaint or other document filed in a lawsuit or other proceeding if such filing is made under seal.
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9.14 Preserved Rights. This Agreement is not intended to, and shall not, in any way prohibit, limit or otherwise interfere with Executive’s protected rights under federal, state or local law to, without notice to Company: (i) communicate or file a charge with a government regulator, (ii) participate in an investigation or proceeding conducted by a government regulator, or (iii) receive an award paid by a government regulator for providing information.
9.15 Cooperation. Subject to Section 9.14, during the Term and thereafter, in the event that any proceeding is commenced by any governmental authority or other person in connection with the business of Company, Executive agrees to cooperate with Company to defend against such proceeding and, if an injunction or other order is issued in any such proceeding, to cooperate with Company in its efforts to have such injunction or other order lifted. If such cooperation is following the end of the Term, then the Company shall reimburse Executive for all reasonable documented out-of-pocket expenses incurred in connection with such cooperation and the Company agrees that such cooperation will not unreasonably interfere with Executive’s duties to a subsequent employer.
10. No Other Contracts. Executive represents and warrants to the Company Group Members that neither the execution and delivery of this Agreement by Executive nor the performance of Executive’s obligations hereunder, shall constitute a default under or a breach of any other agreement or contract to which Executive is a party or by which Executive is bound, nor shall the execution and delivery of this Agreement by Executive nor the performance of Executive’s duties and obligations hereunder give rise to any claim or charge against either Executive or any Company Group Member based upon any other contract, or agreement to which Executive is a party or by which Executive is bound. Executive shall indemnify and hold harmless each Company Group Member against any and all claims that execution and delivery of this Agreement by Executive or Executive’s performance of his obligations hereunder constitutes a default under or a breach of any other agreement or contract to which Executive is a party or by which Executive is bound.
11. Code Section 409A Compliance.
11.1 This Agreement is intended to comply with, or otherwise be exempt from, Section 409A of the Internal Revenue Code of 1986 as amended, and any regulations and Treasury guidance promulgated thereunder (collectively, “Section 409A of the Code”).
11.2 Company and Executive agree that they will execute any and all amendments to this Agreement as they mutually agree in good faith may be necessary to ensure compliance with the provisions of Section 409A of the Code.
11.3 The preceding provisions, however, shall not be construed as a guarantee by Company of any particular tax effect to Executive under this Agreement. No Company Group Member shall be liable to Executive for any payment made under this Agreement which is determined to result in an additional tax, penalty or interest under Section 409A of the Code, nor for reporting in good faith any payment made under this Agreement as an amount includible in gross income under Section 409A of the Code.
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11.4 For purposes of Section 409A of the Code, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.
11.5 With respect to any reimbursement of expenses or any provision of in-kind benefits to Executive specified under this Agreement, such reimbursement of expenses or provision of in-kind benefits shall be subject to the following conditions: (ii) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year, except for any medical reimbursement arrangements providing for the reimbursement of expenses referred to in Section 105(b) of the Code; (ii) the reimbursement of an eligible expense shall be made no later than the end of the year following the year in which such expense was incurred; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
11.6 Notwithstanding anything in this Agreement to the contrary, if a payment obligation arises on account of Executive’s separation from service while Executive is a “specified employee” as described in Section 409A of the Code and the Treasury Regulations thereunder and as determined by Company in accordance with its procedures, by which determination Executive is bound, any payment of “deferred compensation” (as defined under Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation Sections 1.409A- 1(b)(3) through (b)(12)) shall be made on the first (1st) business day of the seventh (7th) month following the date of Executive’s separation from service, or, if earlier, within fifteen (15) days after the appointment of the personal representative or executor of Executive’s estate following Executive’s death.
12. Section 280G of the Code. In the event that it is determined that any payments or benefits provided under this Agreement, together with any payments or benefits to be provided under any other plan, program, arrangement or agreement, would constitute parachute payments within the meaning of Section 280G of the Internal Revenue Code of 1986 as amended, and any regulations and Treasury guidance promulgated thereunder (collectively, “Section 280G of the Code”) and would, but for this Section 12 be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (the “Excise Tax”), then the amounts of any such payments or benefits under this Agreement and such other arrangements shall be either (a) paid in full or (b) reduced to the minimum extent necessary to ensure that no portion of the payments or benefits is subject to the Excise Tax, whichever of the foregoing (a) or (b) results in the Executive’s receipt on an after-tax basis of the greatest amount of payments and benefits after taking into account the applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax). Company shall cooperate in good faith with the Executive in making such determination, including but not limited to providing the Executive with an estimate of any parachute payments as soon as reasonably practicable prior to an event constituting a change in the ownership or effective control of Company or in the ownership of a substantial portion of the assets of Company (within the meaning of Section 280G(b)(2)(A) of the Code). Any such reduction pursuant to this Section 12 shall be made in a manner that results in the greatest economic benefit for the Executive and is consistent with the requirements of Section 409A of the Code. Any determination required under this Section 12 shall be made in writing in good faith by a nationally recognized public accounting firm selected by Company and paid for by Company. Company and the Executive shall provide the accounting firm with such information and documents as the accounting firm may reasonably request in order to make a determination under this Section 12.
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13. Entire Agreement; Modification. This Agreement and the Covenants Agreement constitute the entire agreement between the parties relating to Executive’s employment by (or service to) Company or any of its subsidiaries and/or affiliates and supersede all prior or simultaneous representations, discussions, negotiations, and agreements, whether written or oral, including, without limitation, illustrative terms of employment and that certain term sheet previously provided to Executive dated September 4, 2018. This Agreement may be amended or modified only with the written consent of Executive and Company. No oral amendment or modification will be effective under any circumstances whatsoever.
THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATES FIRST ABOVE WRITTEN.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of October 5, 2021.
COMPANY | |
EBS Enterprises, LLC | |
By:/s/ Daniel Sollof | |
Name: Daniel Sollof | |
Title: Authorized Signatory | |
EXECUTIVE | |
/s/ Ron Zelhof | |
Mr. Ron Zelhof |
Exhibit 10.11
STOCKHOLDERS AGREEMENT
of
AIRSCULPT TECHNOLOGIES, INC.
dated as of [•], 2021
TABLE OF CONTENTS
Page | ||
RECITALS | 1 | |
Article I DEFINITIONS | 1 | |
Section 1.1. | Effective Date | 1 |
Section 1.2. | Certain Defined Terms | 1 |
Section 1.3. | Other Interpretive Provisions. | 3 |
Article II CORPORATE GOVERNANCE | 3 | |
Section 2.1. | The Board. | 3 |
Section 2.2. | Other Rights of Principal Investor Designees | 5 |
Section 2.3. | Corporate Opportunity | 5 |
Article III INFORMATION | 5 | |
Section 3.1. | Books and Records; Access. | 5 |
Section 3.2. | Tax Information | 5 |
Section 3.3. | Confidentiality | 5 |
Section 3.4. | Sharing of Information | 5 |
Article IV MISCELLANEOUS | 5 | |
Section 4.1. | Cooperation | 5 |
Section 4.2. | Termination | 5 |
Section 4.3. | Amendments and Waivers. | 6 |
Section 4.4. | Assignment | 6 |
Section 4.5. | Third Parties. | 6 |
Section 4.6. | Notices | 7 |
Section 4.7. | Further Assurances | 7 |
Section 4.8. | Entire Agreement | 8 |
Section 4.9. | Governing Law; Jurisdiction; Waiver of Jury Trial | 8 |
Section 4.10. | Severability | 8 |
Section 4.11. | Enforcement | 8 |
Section 4.12. | Liability of Parties | 8 |
Section 4.13. | Counterparts | 8 |
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THIS STOCKHOLDERS AGREEMENT (this “Agreement”) is entered as of [•], 2021, among AirSculpt Technologies, Inc., a Delaware corporation (the “Company”), and each of the other parties identified on the signature pages hereto (the “Holders”).
RECITALS
WHEREAS, in connection with the Company’s initial public offering of its shares of Common Stock (the “IPO”), the Company and the Holders desire to set forth their agreement regarding certain governance matters.
NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual promises hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Holders hereby agree as follows:
Article I
DEFINITIONS
Section 1.1. Effective Date. This Agreement shall become effective upon the closing of the IPO (the “Effective Date”).
Section 1.2. Certain Defined Terms. As used herein, the following terms shall have the following meanings:
“Affiliate” has the meaning set forth in Rule 12b-2 promulgated under the Exchange Act, as in effect on the date hereof; provided that the Company and its Subsidiaries shall not be deemed to be Affiliates of the VSCP Investor for purposes of this Agreement.
“Agreement” has the meaning assigned to such term in the preamble.
“beneficially own” has the meaning set forth in Rule 13d-3 promulgated under the Exchange Act.
“Board” means the Board of Directors of the Company.
“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in the New York City.
“Common Stock” means collectively the common stock, par value $0.001 per share, of the Company and any securities issued in respect thereof, or in substitution therefor, in connection with any stock split, dividend or combination, or any reclassification, recapitalization, merger, consolidation, exchange or other similar reorganization.
“Company” has the meaning assigned to such term in the preamble.
“Company Charter” means the certificate of incorporation of the Company in effect on the date hereof, as may be amended from time to time.
“Control” (including its correlative meanings, “Controlled by” and “under common Control with”) means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise) of a Person.
“Director” means any member of the Board.
“Effective Date” has the meaning set forth in Section 1.1.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.
“Governmental Authority” means any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
“Holders” has the meaning set forth in the preamble.
“IPO” has the meaning set forth in the Recitals.
“Law” means any statute, law, regulation, ordinance, rule, injunction, order, decree, governmental approval, directive, requirement, or other governmental restriction or any similar form of decision of, or determination by, or any interpretation or administration of any of the foregoing by, any Governmental Authority.
“Necessary Action” means, with respect to a specified result, all actions necessary to cause such result, including (i) voting or providing a written consent or proxy with respect to the Common Stock, (ii) causing the adoption of stockholders’ resolutions and amendments to the organizational documents of the Company, (iii) executing agreements and instruments, and (iv) making, or causing to be made, with Governmental Authorities, all filings, registrations or similar actions that are required to achieve such result.
“Person” means an individual, corporation, association, partnership, joint venture, limited liability company, estate, trust, or any other legal entity.
“Principal Investor” has the meaning set forth in Section 2.1(a)(iv).
“Principal Investor Designee” means any VSCP Designee or Rollins Designee.
“Rollins Designee” has the meaning assigned to such term in Section 2.1(a)(ii).
“Rollins” means Aaron Rollins, M.D. and his spouse, issue (including adopted children and their issue) and trusts, estates or custodianships (x) for the primary benefit of one or more of Aaron Rollins, M.D. or any spouse or issue (including adopted children and their issue) or (y) created by Aaron Rollins, M.D. for bona fide estate planning or similar purposes..
“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which: (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, representatives or trustees thereof is at the time owned or Controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or any combination thereof; or (ii) if a limited liability company, partnership, association or other business entity, a majority of the total voting power of stock (or equivalent ownership interest) of the limited liability company, partnership, association or other business entity is at the time owned or Controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or any combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall (a) be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or (b) Control the managing member, managing director or other governing body or general partner of such limited liability company, partnership, association or other business entity.
“VSCP” means Vesey Street Capital Partners, L.L.C., a Delaware limited liability company.
“VSCP Designee” has the meaning assigned to such term in Section 2.1(a)(i).
“VSCP Investor” means, collectively, VSCP EBS Aggregator, LP, VSCP EBS Blocker, Inc., EBS Aggregator, LLC, EBS Aggregator Blocker, Inc., EBS Aggregator Blocker Holdings, LLC, Vesey Street Capital Partners Healthcare Fund, LP, Vesey Street Capital Partners Healthcare Fund-A, LP or any Affiliate of VSCP.
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Section 1.3. Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.
(b) The words “hereof,” “herein,” “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and any subsection and section references are to this Agreement unless otherwise specified.
(c) The term “including” is not limiting and means “including without limitation.”
(d) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.
(e) Whenever the context requires, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms.
Article II
CORPORATE GOVERNANCE
Section 2.1. The Board.
(a) Election of Directors.
(i) Following the Effective Date, the VSCP Investor shall have the right, but not the obligation, to designate, and the individuals nominated for election as Directors by or at the direction of the Board or a duly-authorized committee thereof shall include, a number of individuals such that, upon the election of each such individual, and each other individual nominated by or at the direction of the Board or a duly authorized committee of the Board, as a Director and taking into account any Director continuing to serve without the need for re-election, the number of VSCP Designees serving as Directors of the Company will be equal to at least: (A) if the VSCP Investor beneficially owns, directly or indirectly, 25% or more of the shares of the Company’s issued and outstanding Common Stock, two Directors; and (B) if the VSCP Investor beneficially owns, directly or indirectly, 10% or more, but less than 25%, of the shares of the Company’s issued and outstanding Common Stock, one Director (in each case, each such person, a “VSCP Designee”).
(ii) Following the Effective Date, Rollins shall have the right, but not the obligation, to designate, and the individuals nominated for election as Directors by or at the direction of the Board or a duly-authorized committee thereof shall include, a number of individuals such that, upon the election of each such individual, and each other individual nominated by or at the direction of the Board or a duly authorized committee of the Board, as a Director and taking into account any Director continuing to serve without the need for re-election, the number of Rollins Designees serving as Directors of the Company will be equal to one Director if Rollins beneficially owns, directly or indirectly, 10% or more of the shares of the Company’s issued and outstanding Common Stock (such person, the “Rollins Designee”).
(iii) Directors are subject to removal pursuant to the applicable provisions of the Company Charter; provided, however, (A) the VSCP Designees may only be removed with the prior written consent of VSCP and the Rollins Designees may only be removed with the prior written consent of Rollins and (B) VSCP shall have the right to request the removal of any VSCP Designee (with or without cause) nominated by the VSCP Investor, from time to time and at any time, from the Board, and Rollins shall have the right to request the removal of any Rollins Designee (with or without cause) nominated by Rollins, from time to time and at any time, from the Board, in each case, exercisable upon written notice to the Company, and the Company shall take all Necessary Action to cause such removal.
(iv) In the event that a vacancy is created at any time by death, disability, retirement, removal (with or without cause), disqualification, resignation or otherwise with respect to the VSCP Investor or Rollins (collectively, the “Principal Investors”, and each a “Principal Investor”), any individual nominated by or at the direction of the Board or any duly-authorized committee thereof to fill such vacancy shall be filled, and the Company shall take all Necessary Action to cause such vacancy to be filled, as promptly as reasonably practicable, by a new designee of such Principal Investor, subject to the restrictions set forth in Section 2.1(a)(i) and Section 2.1(a)(ii).
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(v) In the absence of any designation from any Principal Investor as specified in Section 2.1(a)(i) or Section 2.1(a)(ii) hereof, the Director(s) previously designated by such Principal Investor and then serving shall be reelected if willing to serve unless such individual has been removed as provided herein, and otherwise such Board seat(s) shall remain vacant until otherwise filled as provided above.
(vi) The Company shall take all Necessary Action to include in the slate of nominees recommended by the Board or any duly-authorized committee thereof for election at any meeting of stockholders called for the purpose of electing directors the persons designated pursuant to this Section 2.1 and to nominate and recommend each such individual to be elected as a Director as provided herein, and to solicit proxies or consents in favor thereof. The Company is entitled, solely for the purposes set forth in this Section 2.1(a)(vi), to identify such individual as a VSCP Designee or a Rollins Designee pursuant to this Agreement.
(vii) In addition to any vote or consent of the Board or the stockholders of the Company required by applicable Law or the Company Charter or the bylaws of the Company, and notwithstanding anything to the contrary in this Agreement, for so long as the VSCP Investor beneficially owns, directly or indirectly, at least 25% of the shares of the Company’s issued and outstanding Common Stock, the Company shall take all Necessary Action to ensure that the number of Directors serving on the Board shall not exceed seven without the prior written consent of the VSCP Investor.
(viii) For so long as the VSCP Investor is entitled to designate two Directors for election to the Board in accordance with the terms and conditions of this Agreement, the Principal Investors and the Company shall take all Necessary Action to cause the Chairperson of the Board to be an individual chosen by the VSCP Investor, who shall initially be Adam Feinstein. Except as otherwise set forth herein, the majority of the Board shall determine the Chairperson of the Board.
(ix) Once any Principal Investor no longer has the right to designate a director for election to the Board as set forth in Section 2.1(a)(i) or Section 2.1(a)(ii), such Principal Investor shall take all Necessary Action to cause the appropriate number of such Principal Investor's designees to tender his or her resignation from the Board effective at the Company's next annual meeting of stockholders. The Board (acting by majority vote of all directors excluding all the designees of the applicable Principal Investor) shall have the option, but not the obligation, to accept or reject any such resignation.
(x) Upon completion of the IPO, each of the initial VSCP Designees and the Rollins Designee shall be assigned to one of the three (3) classes of directors, each of whose members shall serve a staggered three-year term as follows:
(A) The class I directors (whose term expires at the first annual meeting of stockholders at which directors are elected following completion of the IPO) shall include one (1) VSCP Designee;
(B) The class II directors (whose term expires at the second annual meeting of stockholders at which directors are elected following completion of the IPO) shall include one (1) VSCP Designee; and
(C) The class III directors (whose term expires at the third annual meeting of stockholders at which directors are elected following completion of the IPO) shall include the Rollins Designee.
(b) Committees. Subject to applicable Law and stock exchange regulations, the Company shall take all Necessary Action to have a Principal Investor Designee then serving on the Board appointed to serve on each committee of the Board for so long as the applicable Principal Investor has the right to at least one Principal Investor Designee. Each Principal Investor shall have the right to appoint a representative as an observer to any committee of the Board to which the Principal Investor (i) does not elect to have a representative appointed or (ii) is prohibited by applicable Law and stock exchange regulations from having a representative appointed, in each case for so long as such Principal Investor has the right pursuant to this Article II to designate at least one Principal Investor Designee.
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(c) Compensation. Except to the extent the VSCP Designee may otherwise notify the Company, any VSCP Designee shall be entitled to compensation consistent with the compensation received by other non-employee Directors, including any fees and equity awards, provided, that (i) to the extent any Director compensation is payable in the form of equity awards, at the election of a VSCP Designee, in lieu of any equity award, such compensation shall be paid in an amount of cash equal to the value of the equity award as of the date of the award, with any such cash subject to the same vesting terms, if any, as the equity awarded to other Directors and (ii) at the election of a VSCP Designee, any Director compensation (whether cash, equity awards and/or cash in lieu of equity as may be designated by the electing VSCP Designee) shall be paid to the VSCP Investor or an Affiliate thereof specified by such VSCP Designee rather than to such VSCP Designee. If the Company adopts a policy that Directors own a minimum amount of equity in the Company, no VSCP Designee that is an Affiliate or employee of the VSCP Investor shall be subject to such policy unless otherwise determined by the VSCP Investor in its sole discretion.
Section 2.2. Other Rights of Principal Investor Designees. Each Principal Investor Designee serving on the Board shall be entitled to rights and privileges that are no less favorable than those applicable to all other Directors generally or to which all such Directors are entitled. In furtherance of the foregoing, from and after the date hereof, the Company shall execute and deliver to each Principal Investor Designee, concurrently with or prior to such Principal Investor Designee joining the Board, an indemnification agreement substantially in the form filed with the U.S. Securities and Exchange Commission and shall otherwise indemnify, exculpate, and reimburse fees and expenses of such Principal Investor Designee and provide each such Principal Investor Designee with customary director and officer insurance on terms that are no less favorable than the Company indemnifies, exculpates, reimburses and provides insurance for any other Director pursuant to the Company Charter, the bylaws of the Company, applicable Law or otherwise.
Section 2.3. Corporate Opportunity. The Company shall take all Necessary Action to ensure that no amendment to the provisions of the Company Charter pertaining to the renouncement of corporate opportunity is effected without the consent of the VSCP Investor for so long as the VSCP Investor has the right pursuant to this Article II to designate at least one (1) VSCP Designee.
Article III
INFORMATION
Section 3.1. Sharing of Information. Each party hereto acknowledges and agrees that any VSCP Designee may share any information concerning the Company and its Subsidiaries received by such VSCP Designee from or on behalf of the Company or its designated representatives with the VSCP Investor and its designated representatives, subject to execution of an agreement (in form and substance approved by the Company) by each such recipient to maintain the confidentiality of such information. Notwithstanding the foregoing, the Company may designate that certain information provided to a VSCP Designee may not be shared with the VSCP Investor and its designated representatives.
Article IV
MISCELLANEOUS
Section 4.1. Termination. This Agreement shall terminate automatically (without any action by any party hereto) as to each Principal Investor as of the latest of (i) the time that such Principal Investor no longer has the right to nominate any directors to the Board pursuant to Article II hereof, (ii) the date that is the second anniversary of the completion of the IPO and (iii) the time that the shares of the Company’s outstanding Common Stock held by such Principal Stockholder constitute less than 3% of all of the shares of the Company's outstanding Common Stock. Article IV will survive any termination of this Agreement.
Section 4.2. Amendments and Waivers.
(a) The terms and provisions of this Agreement may be modified or amended only with the written approval of the Company and the Holders holding a majority of the shares of Common Stock then held by the Holders in the aggregate; provided, however, that any modification or amendment (i) to Section 2.1, Section 2.3, Section 3.1, Section 4.1 or this Section 4.2, or any other provision of this Agreement that would have the effect of modifying or amending such sections, shall also require the approval of the VSCP Investor and Rollins, as applicable, and (ii) that would adversely affect the rights of (A) the VSCP Investor in a manner different from any other Holder, shall also require the approval of the VSCP Investor or (B) Rollins in a manner different from any other Holder, shall also require the approval of Rollins.
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(b) Except as expressly set forth in this Agreement, neither the failure nor delay on the part of any party hereto to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence.
(c) No party shall be deemed to have waived any claim arising out of this Agreement, or any right, remedy, power or privilege under this Agreement, unless the waiver of such claim, right, remedy, power or privilege is expressly set forth in a written instrument duly executed and delivered on behalf of such party; and any such waiver shall not be applicable or have any effect except in in the specific instance in which it is given.
(d) Each Principal Investor, in such Principal Investor’s sole discretion, may withdraw from this Agreement at any time by written notice to the Company. Thereafter, such Principal Investor shall cease to be a party to this Agreement, shall have no further rights or obligations hereunder and none of the terms or provisions hereof shall have any continuing force and effect with respect to such Principal Investor.
(e) Any party hereto may unilaterally waive any of its rights hereunder in a signed writing delivered to the Company.
Section 4.3. Assignment. This Agreement and the rights and obligations hereunder may not be assigned without the express prior written consent of the other parties hereto, and any attempted assignment, without such consents, will be null and void.
Section 4.4. Third Parties. Except as provided for in Article II and Article III with respect any Principal Investor Designees and the VSCP Investor, this Agreement does not create any rights, claims or benefits inuring to any person that is not a party hereto nor create or establish any third party beneficiary hereto.
Section 4.5. Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by e-mail or confirmed facsimile if sent during normal business hours of the recipient, and, if not, then on the next Business Day; (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one Business Day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to such party’s address as set forth below or at such other address as the party shall have furnished to each other party in writing in accordance with this provision:
If to the Company, to:
AirSculpt Technologies, Inc.
400 Alton Road, Unit TH-103M
Miami Beach, FL 33129
Email: ddean@elitebodysculpture.com
Attn: Aaron Rollins, M.D.
with a copy to:
McDermott Will & Emery LLP
500 North Capital Street, NW
Washington, DC 20001-1531
Email: tconaghan@mwe.com
Attn: Thomas Conaghan
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If to VSCP EBS Aggregator, L.P.:
c/o Vesey Street Capital Partners, LLC
428 Greenwich Street, Townhouse
New York, NY 10013
Email: dan@vscpllc.com
Attention: Daniel Sollof
with a copy to:
McDermott Will & Emery LLP
500 North Capital Street, NW
Washington, DC 20001-1531
Email: tconaghan@mwe.com
Attn: Thomas Conaghan
If to Rollins:
400 Alton Road, Unit TH-103M
Miami Beach, FL 33129
Email: arollins@elitebodysculpture.com
Attn: Aaron Rollins, M.D.
with a copy to:
Young & Company
21700 Oxnard Street, Suite 2030
Email: melody@young-co.com
Attn: Melody Young
If to JCBI II LLC:
840 First Avenue, Suite 200
King of Prussia, PA 19406
Email: bcarden@burchcreativecapital.com
Attention: J. Brian Carden
Section 4.6. Further Assurances. At any time or from time to time after the date hereof, the parties agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and to otherwise carry out the intent of the parties hereunder.
Section 4.7. Entire Agreement. Except as otherwise expressly set forth herein, this Agreement sets forth the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, that may have related to the subject matter hereof in any way.
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Section 4.8. Governing Law; Jurisdiction; Waiver of Jury Trial. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS OF THE STATE OF DELAWARE REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES WOULD REQUIRE OR PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. NO SUIT, ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN ANY COURT OR BEFORE ANY SIMILAR AUTHORITY OTHER THAN IN A COURT OF COMPETENT JURISDICTION IN THE STATE OF DELAWARE, AND THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF SUCH SUIT, PROCEEDING OR JUDGMENT. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE HAD TO BRING SUCH AN ACTION IN ANY OTHER COURT, DOMESTIC OR FOREIGN, OR BEFORE ANY SIMILAR DOMESTIC OR FOREIGN AUTHORITY. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING IN RELATION TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
Section 4.9. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.
Section 4.10. Enforcement. Each party hereto acknowledges and agrees that the other parties hereto would be irreparably harmed and money damages would not be an adequate remedy in the event that any of the covenants or agreements in this Agreement are not performed by any of them in accordance with its terms, and it is therefore agreed that in addition to and without limiting any other remedy or right it may have, the non-breaching party will have the right to an injunction, temporary restraining order or other equitable relief (without the necessity of having to prove actual damages therefrom or post a bond therefore) in any court of competent jurisdiction enjoining any such breach and enforcing specifically the terms and provisions hereof.
Section 4.11. Liability of Parties. To the extent not inconsistent with applicable Law, neither any Principal Investor Designee nor any Holder, nor any of their respective officers, directors, employees, partners, members, shareholders or Affiliates, nor any officer of the Company or any Subsidiary thereof shall be liable, responsible or accountable in damages or otherwise to the Company or to any Holder for any action taken or for any failure to act on behalf of the Company in connection with the business or operations of the Company, if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful.
Section 4.12. Counterparts. This Agreement may be executed in any number of separate counterparts each of which when so executed shall be deemed to be an original and all of which together shall constitute one and the same agreement. Counterpart signature pages to this Agreement may be delivered by facsimile or electronic delivery (i.e., by email of a PDF signature page) and each such counterpart signature page will constitute an original for all purposes.
[Signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Stockholders Agreement as of the date first set forth above.
AIRSCULPT TECHNOLOGIES, INC. | ||
By: | ||
Name: | ||
Title: |
Signature Page to Stockholders Agreement
VSCP EBS AGGREGATOR, LP | ||
By: | Vesey Street Capital Partners Healthcare GP, L.P., its General Partner | |
By: | Vesey Street Capital Partners Healthcare UGP, L.P., its General Partner | |
By: | ||
Name: | ||
Title: |
Signature Page to Stockholders Agreement
Name: Aaron Rollins, M.D. |
Signature Page to Stockholders Agreement
JCBI II LLC | ||
By: | ||
Name: | ||
Title: |
Signature Page to Stockholders Agreement
EXHIBIT 10.12
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is entered into by and between EBS Enterprises, LLC (“EBS Enterprises”), a Delaware limited liability company and Mr. Dennis Dean (“Executive”), and shall be effective immediately following the time, and subject to, AirSculpt Technologies, Inc.’s (“AirSculpt” and together with EBS Enterprises, “Company”) registration statement on Form S-1 related to its initial public offering being declared effective (the “IPO”) by the Securities and Exchange Commission (the “Effective Date”).
WITNESSETH:
WHEREAS, Executive and EBS Enterprises previously entered into an Employment Agreement effective as of June 1, 2021 (the “Prior Agreement”);
WHEREAS, in connection with AirSculpt’s IPO it is anticipated that EBS Enterprises will become a wholly-owned subsidiary of AirSculpt;
WHEREAS, in connection with, and subject to the occurrence of, the IPO, Executive and Company desire to amend and restate the Prior Agreement;
WHEREAS, Company desires to continue to employ Executive as Chief Financial Officer of Company in accordance with the terms and conditions of this Agreement; and
WHEREAS, Executive desires to continue to serve as Chief Financial Officer of Company in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and obligations hereinafter set forth, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Employment and Acceptance. During the Term (as defined in Section 3 below), Company shall employ Executive, and Executive shall continue to serve Company, subject to the terms of this Agreement. If, for any reason, an IPO does not occur prior to January 1, 2022, then this Agreement will not be effective and will be null and void, and the Prior Agreement will be reinstated with full force and effect.
2. Title; Duties and Obligations; Location.
2.1 Title. Company shall employ Executive to render services to Company. Executive shall serve in the capacity of Chief Financial Officer of Company.
2.2 Best Efforts/Duties. The duties and responsibilities of Executive shall include such duties and responsibilities as assigned by the Chief Executive Officer and Company’s Board of Directors (the “Board”) from time to time consistent with the position of Chief Financial Officer. Executive shall perform faithfully and diligently all such duties assigned to Executive. Company reserves the right to modify Executive’s position and duties at any time in its sole and absolute discretion; provided, that such position and the duties assigned are consistent with the position of a Chief Financial Officer or higher level of authority or prestige. In Executive’s capacity as Chief Financial Officer of Company, Executive shall report to, and be subject to the lawful direction of, the Chief Executive Officer. Executive will expend Executive’s best efforts on behalf of Company, and will abide by all policies of Company applicable to Company’s executives generally and all decisions made by the Board, all in accordance with applicable federal, state and local laws, regulations or ordinances. Executive will act in the best interest of Company at all times in carrying out his duties and responsibilities under this Agreement. Except as permitted under subsections 2.5 (i) and(ii) below, Executive shall devote Executive’s full business time and efforts to the performance, to the best of his ability, experience and talent, of Executive’s assigned duties for Company.
2.3 Other Positions. In addition to serving in the capacity of Chief Financial Officer of Company, Executive shall also serve in such other executive-level positions or capacities as may, from time to time, be reasonably requested by the Board, including, without limitation (subject to election, appointment, re-election or re-appointment, as applicable) as an officer of any of Company’s subsidiaries and/or affiliates, in each case, for no additional compensation.
2.4 Compliance with Company Policies. Subject to Section 6 hereof, during the Term, Executive shall be in conformance and comply with all Company written or established policies, rules and regulations governing the conduct of its employees, now in effect, or as subsequently adopted or amended.
2.5 Time Commitment. During the Term, Executive shall use his best efforts to promote the interests of Company (and, to the extent he serves one or more subsidiaries and/or affiliates pursuant to Section 2.3 hereof, its applicable subsidiaries or affiliates) and, except as provided in subsections (i) and (ii) below, shall devote all of his business time to the performance of his duties for Company (and, to the extent he serves one or more subsidiaries or affiliates pursuant to Section 2.3 hereof, its applicable subsidiaries or affiliates) and, shall not, directly or indirectly, render any services to any other person or organization, whether for compensation or otherwise, except with the Board’s prior written consent (which shall not be unreasonably withheld; provided, that nothing in this Agreement shall prevent Executive from (i) participating in charitable, civic, educational, professional, community or industry non-profit associations and organizations and (ii) managing Executive’s passive personal investments, so long as such activities described in clauses (i) through (ii) do not, individually or in the aggregate, materially interfere or conflict with Executive’s duties hereunder, create a business or fiduciary conflict (in each case, as determined by the Board). Notwithstanding the foregoing, the Board will review the activities in clauses (i) through (ii) of the preceding sentence on an ongoing basis and reserves the right to prohibit any such activities that it determines in good faith materially interfere with performance of Executive’s duties hereunder, and will provide Executive with written notice of such determination. If the Board so prohibits such activities, Executive will be given a commercially reasonable period of time to extract himself from such activities, during which time he will not be considered in breach of this Agreement.
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2.6 Location. Executive’s services shall be performed principally in Nashville, Tennessee. However, from time to time, Executive may be required by his job responsibilities to travel on Company business, and Executive agrees to do so.
3. Term. The employment relationship pursuant to this Agreement shall commence on the Effective Date and continue until terminated in accordance with Section 7 below (such period of the employment relationship shall be referred to herein as the “Term”). For avoidance of doubt, Executive’s employment shall be “at-will” and may be terminated by either party at any time in accordance with the terms of this Agreement.
4. Compensation. For the services rendered by Executive in any capacity under this Agreement during the Term (including, without limitation, serving as an officer, director or member of any committee of the Board and any service for one or more subsidiaries or affiliates pursuant to Section 2.3 hereof), Executive shall be compensated as follows (subject, in each case, to the provisions of Section 4 below):
4.1 Base Salary. As compensation for Executive’s performance of Executive’s duties hereunder, beginning as of the Effective Date, Company shall pay to Executive a salary at the annualized rate of $500,000, payable in substantially equal installments in accordance with Company’s normal payroll practices as in effect from time to time. The salary may be reviewed annually by the Board or a committee thereof and may be increased, but not decreased, unless such decrease is agreed to by Executive. As used herein Executive’s “Salary” shall be his salary as in effect from time to time after any such adjustments. Company shall deduct from each such installment all amounts required to be deducted or withheld under applicable law or under any employee benefit plan or program in which Executive participates.
4.2 Annual Bonus. In addition to the Salary, Executive shall be eligible for an annual target cash performance bonus of 75% of Executive’s Salary (the “Bonus”) for each fiscal year during the Term (beginning in fiscal year 2021), based upon achievement of individual and/or Company performance criteria, as determined annually by the Board in its sole and absolute discretion. Any Bonus for a fiscal year to the extent earned, shall be paid in a lump sum at a time established by the Board but no later than March 15 of the calendar year immediately following the last day of the fiscal year to which the Bonus relates. Subject to Section 7.2(ii) below, Executive must be actively employed with Company at the time of such payment in order to receive the Bonus for that immediately preceding fiscal year.
4.3 IPO Cash Bonus. In connection with, and subject to the occurrence of, the IPO, Executive shall be eligible to receive a one-time lump sum cash payment in the amount of $1,800,000 upon the successful completion of the IPO (the “IPO Cash Bonus”). The IPO cash bonus shall be paid as soon as reasonably practicable following the IPO and no later than March 15 of the calendar year immediately following the last day of the calendar year in which the successful completion of the IPO occurs. Executive must be actively employed with Company through the occurrence of the IPO in order to receive the IPO Cash Bonus.
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4.4 Initial Equity Award. As soon as reasonably practicable after the Effective Date, Executive will be granted an equity award in respect of the number of shares of common stock equal to 1.75% of the common stock of AirSculpt outstanding upon effectiveness of AirSculpt’s registration statement on Form S-1 related to the IPO (the “Initial Equity Award”), excluding the underwriter’s overallotment. The Initial Equity Award shall consist of 50% restricted stock units and 50% performance-based restricted stock units; which awards shall be substantially consistent with the forms of award agreement attached as Exhibit B and Exhibit C hereto. All equity grants are subject to the approval of the Board.
4.5 Annual Equity Awards. Executive will be eligible to participate in the Company’s annual equity grant program. Executive’s first annual equity grant will be awarded in the first quarter of calendar year 2022 (the “Annual Equity Award”). The Annual Equity Award may be granted in any form allowed under the Company’s 2021 Equity Incentive Plan with vesting terms and conditions as set forth by the Board in its sole and absolute discretion. Each Annual Equity Award shall be subject to the terms and conditions of the applicable grant agreement. All equity grants are subject to the approval of the Board.
5. Benefits.
5.1 Customary Benefits. Executive will be eligible for all customary and usual retirement and welfare benefits (excluding, for the avoidance of doubt, bonus plans not expressly referred to in this Agreement and severance plans/programs/policies, if any) generally available to executives of Company, subject to the terms and conditions of such benefit plans. Company reserves the right to change or eliminate benefits on a prospective basis, at any time and from time to time.
5.2 Paid Time Off. Executive shall be entitled to paid vacation, holidays, personal days and sick leave in accordance with the policies, programs and practices of Company in effect from time to time, but in no event less than four (4) weeks per calendar year (pro-rated for any partial years). Such vacation shall be taken at such intervals as shall be appropriate and consistent with the proper performance of Executive’s duties hereunder.
6. Business Expenses. Company shall reimburse Executive during the Term, for all reasonable out-of-pocket business expenses incurred by Executive in the performance of his duties hereunder consistent with level and the manner Executive has historically received such reimbursement and otherwise in accordance with the Company’s expense reimbursement policies as in effect from time to time, provided, that in the event of a conflict between Executive’s historic business reimbursement practices and the Company’s reimbursement policies, the historic business reimbursement practices shall govern. In order to receive such reimbursement, Executive shall furnish to Company documentary evidence of each such expense in the form required to comply with Company’s policies.
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7. Termination of Executive’s Employment.
7.1 Termination for Cause by Company. Although Company anticipates a mutually rewarding employment relationship with Executive, Company may terminate Executive’s employment immediately at any time for Cause. For purposes of this Agreement, “Cause” is defined as: (i) fraud, embezzlement or other misappropriation by Executive of funds or property of Company or any of its subsidiaries or affiliates (collectively, the “Company Group,” and each, a “Company Group Member”) or any Persons or professionals for which Company or its subsidiaries or affiliates provides business, management, administrative, marketing or other support services, including but not limited to any corporation, limited liability company, partnership or association that is party to a management services agreement or similar agreement with Company or any of Company’s subsidiaries or affiliates for the rendering of certain management services and other related services by Company or any of Company’s subsidiaries or affiliates (each, a “Managed Practice” and collectively, “Managed Practices”); (ii) conviction of, or plea of nolo contender to, a felony or crime involving moral turpitude; (iii) any gross misconduct by Executive that is injurious, directly or indirectly, in any material respect to any Company Group Member or any Managed Practice; (iv) Executive’s failure to perform, or breach of, in any material respect, any of his obligations under this Agreement or any other agreement or contract between Executive and any Company Group Member; (v) Executive’s use of alcohol or controlled substances that impairs his ability to perform his duties and responsibilities with respect to any Company Group Member or Managed Practices in any material respect; (vi) Executive challenging the legality, validity or enforceability of any of the Managed Practice documents; or (vii) Executive’s failure to give timely notice of his resignation under Section 7.4.
In the event Executive’s employment is terminated in accordance with this Section 7.1, Company shall pay the following amounts to Executive within the time period required by applicable law:
(i) any accrued but unpaid Salary (as determined pursuant to Section 4.1 hereof) for services rendered prior to the date of Executive’s termination of employment (the “Termination Date”), which accrued but unpaid Salary shall be paid on or before the time required by law;
(ii) payment for any accrued but unused paid time off;
(iii) expenses reimbursable under Section 6 hereof incurred prior to the Termination Date but not yet reimbursed, which reimbursable (but not yet reimbursed) expenses, if any, shall (subject to Executive’s timely submission of invoices) be paid on or before the time required by law; and
(iv) vested entitlements under any other Company benefit plan or program (with the exception of those, if any, relating to severance) that Executive is otherwise entitled to receive under such plan, program, policy or practice on the Termination Date, in each case, in accordance with (and subject to the terms, conditions and limitations set forth in) such plan, program, policy, or practice.
The amounts described in clauses (i) through (iv) above shall be referred to herein as the “Accrued Obligations.” All other Company obligations to Executive pursuant to this Agreement will become automatically terminated and completely extinguished.
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7.2 Termination Without Cause by Company/Termination by Executive For Good Reason. Company may terminate Executive’s employment under this Agreement without Cause at any time upon written notice to Executive, or Executive may resign with Good Reason subject to the notification requirements and the Cure Period (as defined below), in each case as set forth below. In the event of such termination, Executive will receive:
(i) The Accrued Obligations and any Bonus earned in respect of a prior completed year that has not yet been paid; and
(ii) Subject to Section 7.6, a payment in the aggregate amount equal to the sum of one-and-a-half (1.5) multiplied by the sum of (x) Executive’s annual Salary (at the rate as of the Termination Date) plus (y) Executive’s target Bonus, payable (less applicable withholdings and deductions) in a lump sum on the next regular pay date of Company following the date that the Release becomes effective and is no longer subject to revocation, in accordance with Company’s then-current payroll practices, but in no event later than March 15 of the calendar year immediately following the calendar year in which the Termination Date occurs. The payment referred to in this clause (ii), is referred to as the “Severance Payment.”
For purposes of this Agreement, “Good Reason” is defined as any one or more of the following without Executive’s prior written consent:
(a) a material reduction of Executive’s title, authority, duties or responsibilities with Company;
(b) a material reduction in Executive’s Salary;
(c) relocation of Executive’s principal place of work to a place more than thirty-five (35) miles outside of Nashville, Tennessee, unless such relocation is otherwise agreed to in writing by Executive; or
(d) a material breach by the Company of this Agreement.
Notwithstanding the foregoing, Good Reason shall not exist unless Executive notifies Company in writing of the existence of the applicable condition specified above not later than thirty (30) days after the initial existence of the condition, and Company fails to remedy such condition within fifteen (15) days after receipt of such notice (the “Cure Period”); provided, however, that if Company cannot remedy such condition within such fifteen (15) day period for reasons outside of Company’s reasonable control, as determined by the Board in its sole and absolute discretion, the Cure Period shall be extended to provide an additional period to remedy such condition, which extension shall not in any case exceed fifteen (15) calendar days. In the event Company fails to remedy the condition constituting Good Reason during the applicable Cure Period (after giving effect to any extension of the Cure Period), Executive’s resignation for Good Reason must occur, if at all, within thirty (30) calendar days following the expiration of the Cure Period.
7.3 Termination of Employment due to Executive’s death or Disability. Executive’s employment under this Agreement shall terminate automatically upon Executive’s death. Company may terminate Executive’s employment under this Agreement due to Executive’s Disability (as defined below). In the event of such termination, Executive (or Executive’s estate, as the case may be) will be entitled to receive, the Accrued Obligations, and any Bonus earned in respect of a prior completed year that has not yet been paid, and no other amount, except as required by applicable law.
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All other Company obligations to Executive pursuant to this Agreement will be automatically terminated and completely extinguished. For purposes of this Agreement “Disability” means Executive’s physical or mental illness, injury or infirmity which prevents Executive from performing Executive’s material duties for a period of (A) one-hundred and eighty (180) consecutive calendar days or (B) an aggregate of ninety (90) calendar days out of any consecutive six (6) month period.
7.4 Voluntary Resignation by Executive Without Good Reason. Executive may voluntarily resign Executive’s position with Company without Good Reason at any time, upon sixty (60) days’ advance written notice. The effectiveness of any such voluntary resignation may be accelerated by Company in its sole and absolute discretion. In the event of such termination or resignation, Executive will be entitled to the Accrued Obligations and no other amount, except as required by applicable law.
7.5 Removal from any Boards and Positions. If Executive’s employment is terminated for any reason, Executive shall automatically, without further action, notice or deed, be deemed to resign from any position with any Company Group Member, including, but not limited to, as an officer of any Company Group Member.
7.6 Release. In order to receive the Severance Payments, Executive must timely execute (and not revoke) a separation agreement and general release (the “Release”) in substantially the form attached hereto as Exhibit A within sixty (60) days following the Termination Date, and Executive must not revoke such Release. Notwithstanding anything to the contrary contained in this Agreement, (i) Company’s obligations to provide the Severance Payments will immediately cease if Executive is in breach of the Covenant Agreement in any material respect and fails to cure such breach (if curable) within fifteen (15) days after receipt of notice of such breach from the Company, and (ii) in the event that Executive fails to timely cure such breach of the Covenant Agreement, then upon demand by Company, Executive shall immediately repay to Company the amount of any Severance Payments previously paid.
8. Non-contravention. Executive hereby represents to Company that the execution and delivery of this Agreement by Executive and Company and the performance by Executive of Executive’s duties hereunder shall not constitute a breach of, or otherwise contravene, or be prevented, interfered with or hindered by, the terms of any employment agreement or other agreement or policy to which Executive is a party or otherwise bound, and further that Executive is not subject to any limitation on his activities on behalf of the Company Group Member as a result of agreements into which Executive has entered.
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9. General Provisions.
9.1 Successors and Assigns. The rights and obligations of Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Company. Executive shall not be entitled to assign any of Executive’s rights or obligations under this Agreement.
9.2 Waiver. Any provision of this Agreement may be waived if, and only if, such waiver is in writing and signed by the party against whom the waiver is to be effective. No failure or delay by any party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege, and no waiver in any one instance shall be effective with respect to any other instance or create a course of dealing.
9.3 Attorneys’ Fees. Company and Executive shall bear their own costs, fees and expenses in connection with the negotiation, preparation and execution of this Agreement.
9.4 Key-Man Insurance. Upon Company’s request, Executive shall cooperate (including, without limitation, taking any required physical examinations) in all respects in obtaining a key-man life and/or long-term disability insurance policy with respect to Executive in which Company (or any subsidiary or affiliate) is named as the beneficiary.
9.5 Legal Counsel. Executive acknowledges and warrants that (i) he has been advised that Executive’s interests may be different from Company’s interests, (ii) he has been afforded a reasonable opportunity to review this Agreement, to understand its terms and to discuss it with an attorney and/or financial advisor of his choice and (iii) he knowingly and voluntarily entered into this Agreement. Company and Executive shall each bear their own costs and expenses in connection with the negotiation and execution of this Agreement.
9.6 Severability. In the event any provision of this Agreement is found to be unenforceable by a court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the parties shall receive the benefits contemplated herein to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of such court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.
9.7 Interpretation; Construction. The headings set forth in this Agreement and the division of this Agreement into sections and subsections are for convenience only and shall not be used in interpreting this Agreement. This Agreement has been drafted by legal counsel representing Company, but Executive has participated in the negotiation of its terms. Furthermore, Executive acknowledges that Executive has reviewed and revised this Agreement and had it reviewed by legal counsel and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.
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9.8 Governing Law; Jurisdiction. Any and all actions or controversies arising out of this Agreement, Executive’s employment by Company or the termination thereof, including, without limitation, breach of contract and tort claims, shall be construed and enforced in accordance with the internal laws of the State of Florida, without regard to any choice of law or conflicting provision or rule (whether of the State of Florida or any other jurisdiction) that would cause the laws of any jurisdiction other than the State of Florida to be applied. Any and all actions arising out of this Agreement or Executive’s employment by Company or the termination thereof shall be brought and heard in the state and federal courts located in the Florida, and the parties hereto hereby irrevocably submit to the exclusive jurisdiction of any such courts. COMPANY AND EXECUTIVE HEREBY WAIVE THEIR RESPECTIVE RIGHT TO TRIAL BY JURY IN ANY ACTION CONCERNING THIS AGREEMENT OR ANY AND ALL MATTERS ARISING DIRECTLY OR INDIRECTLY HEREFROM AND REPRESENT THAT THEY HAVE CONSULTED WITH COUNSEL OF THEIR CHOICE SPECIFICALLY WITH RESPECT TO THIS WAIVER.
9.9 Remedies Cumulative. All remedies provided in this Agreement are cumulative and in addition to all other remedies which may be available at law or in equity.
9.10 Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, faxed, or sent by nationally recognized overnight courier service (with next business day delivery requested), or sent by electronic mail, provided, that the submission by electronic mail is promptly confirmed by telephone confirmation thereof or followed by one of the other foregoing permitted means of notice. Any such notice or communication shall be deemed given and effective, in the case of personal delivery, upon receipt by the other party, in the case of faxed or notice by email, upon transmission of the fax or email, in the case of a courier service, upon the next business day, after dispatch of the notice or communication. Any such notice or communication shall be addressed as follows:
If to Company, to:
AirSculpt Technologies, Inc.
400 Alton Road, Unit TH-103M
Miami
Beach, FL 33129
Email: [__________]
Attn: Aaron Rollins, M.D.
with a copy to:
McDermott
Will & Emery LLP
500 North Capital Street, NW
Washington, DC 20001-1531
Email: tconaghan@mwe.com
Attn: Thomas Conaghan
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If to Executive, to him at the offices of Company with a copy to him at his home address as set forth in the records of Company.
9.11 Survival. Notwithstanding anything herein to the contrary, each provision of this Agreement shall survive the termination of this Agreement for any reason or Executive’s ceasing to provide services to Company to the extent necessary to give effect to its terms, including, without limitation, Sections 8, 9, 10, 11, 12, and 13 of this Agreement.
9.12 Counterparts. This Agreement may be executed in any number of counterparts and each such duplicate counterpart shall constitute an original, any one of which may be introduced in evidence or used for any other purpose without the production of its duplicate counterpart. Moreover, notwithstanding that any of the parties did not execute the same counterpart, each counterpart shall be deemed for all purposes to be an original, and all such counterparts shall constitute one and the same instrument, binding on all of the parties hereto.
9.13 Defend Trade Secrets Act. Executive acknowledges receipt of the following notice under the Defend Trade Secrets Act: An individual will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret if he/she (i) makes such disclosure in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney and such disclosure is made solely for the purpose of reporting or investigating a suspected violation of law; or (ii) such disclosure was made in a complaint or other document filed in a lawsuit or other proceeding if such filing is made under seal.
9.14 Preserved Rights. This Agreement is not intended to, and shall not, in any way prohibit, limit or otherwise interfere with Executive’s protected rights under federal, state or local law to, without notice to Company: (i) communicate or file a charge with a government regulator, (ii) participate in an investigation or proceeding conducted by a government regulator, or (iii) receive an award paid by a government regulator for providing information.
9.15 Cooperation. Subject to Section 9.14, during the Term and thereafter, in the event that any proceeding is commenced by any governmental authority or other person in connection with the business of Company, Executive agrees to cooperate with Company to defend against such proceeding and, if an injunction or other order is issued in any such proceeding, to cooperate with Company in its efforts to have such injunction or other order lifted. If such cooperation is following the end of the Term, then the Company shall reimburse Executive for all reasonable documented out-of-pocket expenses incurred in connection with such cooperation and the Company agrees that such cooperation will not unreasonably interfere with Executive’s duties to a subsequent employer.
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10. No Other Contracts. Executive represents and warrants to the Company Group Members that neither the execution and delivery of this Agreement by Executive nor the performance of Executive’s obligations hereunder, shall constitute a default under or a breach of any other agreement or contract to which Executive is a party or by which Executive is bound, nor shall the execution and delivery of this Agreement by Executive nor the performance of Executive’s duties and obligations hereunder give rise to any claim or charge against either Executive or any Company Group Member based upon any other contract, or agreement to which Executive is a party or by which Executive is bound. Executive shall indemnify and hold harmless each Company Group Member against any and all claims that execution and delivery of this Agreement by Executive or Executive’s performance of his obligations hereunder constitutes a default under or a breach of any other agreement or contract to which Executive is a party or by which Executive is bound.
11. Code Section 409A Compliance.
11.1 This Agreement is intended to comply with, or otherwise be exempt from, Section 409A of the Internal Revenue Code of 1986 as amended, and any regulations and Treasury guidance promulgated thereunder (collectively, “Section 409A of the Code”).
11.2 Company and Executive agree that they will execute any and all amendments to this Agreement as they mutually agree in good faith may be necessary to ensure compliance with the provisions of Section 409A of the Code.
11.3 The preceding provisions, however, shall not be construed as a guarantee by Company of any particular tax effect to Executive under this Agreement. No Company Group Member shall be liable to Executive for any payment made under this Agreement which is determined to result in an additional tax, penalty or interest under Section 409A of the Code, nor for reporting in good faith any payment made under this Agreement as an amount includible in gross income under Section 409A of the Code.
11.4 For purposes of Section 409A of the Code, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.
11.5 With respect to any reimbursement of expenses or any provision of in-kind benefits to Executive specified under this Agreement, such reimbursement of expenses or provision of in-kind benefits shall be subject to the following conditions: (ii) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year, except for any medical reimbursement arrangements providing for the reimbursement of expenses referred to in Section 105(b) of the Code; (ii) the reimbursement of an eligible expense shall be made no later than the end of the year following the year in which such expense was incurred; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
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11.6 Notwithstanding anything in this Agreement to the contrary, if a payment obligation arises on account of Executive’s separation from service while Executive is a “specified employee” as described in Section 409A of the Code and the Treasury Regulations thereunder and as determined by Company in accordance with its procedures, by which determination Executive is bound, any payment of “deferred compensation” (as defined under Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12)) shall be made on the first (1st) business day of the seventh (7th) month following the date of Executive’s separation from service, or, if earlier, within fifteen (15) days after the appointment of the personal representative or executor of Executive’s estate following Executive’s death.
12. Section 280G of the Code. In the event that it is determined that any payments or benefits provided under this Agreement, together with any payments or benefits to be provided under any other plan, program, arrangement or agreement, would constitute parachute payments within the meaning of Section 280G of the Internal Revenue Code of 1986 as amended, and any regulations and Treasury guidance promulgated thereunder (collectively, “Section 280G of the Code”) and would, but for this Section 12 be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (the “Excise Tax”), then the amounts of any such payments or benefits under this Agreement and such other arrangements shall be either (a) paid in full or (b) reduced to the minimum extent necessary to ensure that no portion of the payments or benefits is subject to the Excise Tax, whichever of the foregoing (a) or (b) results in the Executive’s receipt on an after-tax basis of the greatest amount of payments and benefits after taking into account the applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax). Company shall cooperate in good faith with the Executive in making such determination, including but not limited to providing the Executive with an estimate of any parachute payments as soon as reasonably practicable prior to an event constituting a change in the ownership or effective control of Company or in the ownership of a substantial portion of the assets of Company (within the meaning of Section 280G(b)(2)(A) of the Code). Any such reduction pursuant to this Section 12 shall be made in a manner that results in the greatest economic benefit for the Executive and is consistent with the requirements of Section 409A of the Code. Any determination required under this Section 12 shall be made in writing in good faith by a nationally recognized public accounting firm selected by Company and paid for by Company. Company and the Executive shall provide the accounting firm with such information and documents as the accounting firm may reasonably request in order to make a determination under this Section 12.
13. Entire Agreement; Modification. This Agreement and the Covenants Agreement constitute the entire agreement between the parties relating to Executive’s employment by (or service to) Company or any of its subsidiaries and/or affiliates and supersede all prior or simultaneous representations, discussions, negotiations, and agreements, whether written or oral. This Agreement may be amended or modified only with the written consent of Executive and Company. No oral amendment or modification will be effective under any circumstances whatsoever.
THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATES FIRST ABOVE WRITTEN.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on October 5, 2021.
COMPANY | ||
EBS Enterprises, LLC | ||
By: | /s/ Daniel Sollof | |
Name: Daniel Sollof | ||
Title: Authorized Signatory | ||
EXECUTIVE | ||
/s/ Dennis Dean | ||
Mr. Dennis Dean |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our report dated September 10, 2021, with respect to the financial statements of AirSculpt Technologies, Inc. contained in the Registration Statement and Prospectus. We consent to the use of the aforementioned report in the Registration Statement and Prospectus, and to the use of our name as it appears under the caption “Experts.”
/s/ GRANT THORNTON LLP
Miami, Florida
October 19, 2021
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our report dated July 2, 2021, with respect to the consolidated financial statements of EBS Intermediate Parent LLC contained in the Registration Statement and Prospectus. We consent to the use of the aforementioned report in the Registration Statement and Prospectus, and to the use of our name as it appears under the caption “Experts.”
/s/ GRANT THORNTON LLP
Miami, Florida
October 19, 2021
Exhibit 99.1
Consent to be Named as a Director Nominee
In connection with the filing by AirSculpt Technologies, Inc. of the Registration Statement on Form S-1, and in all subsequent amendments and post-effective amendments or supplements thereto, with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of AirSculpt Technologies, Inc. in the Registration Statement and any and all amendments and supplements thereto. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.
Dated: October 20, 2021
By: | /s/ Caroline Chu | |
Name: | Caroline Chu |
EXHIBIT 99.2
Consent to be Named as a Director Nominee
In connection with the filing by AirSculpt Technologies, Inc. of the Registration Statement on Form S-1, and in all subsequent amendments and post-effective amendments or supplements thereto, with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of AirSculpt Technologies, Inc. in the Registration Statement and any and all amendments and supplements thereto. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.
Dated: October 20, 2021
By: | /s/ Thomas Aaron | |
Name: | Thomas Aaron |
EXHIBIT 99.3
Consent to be Named as a Director Nominee
In connection with the filing by AirSculpt Technologies, Inc. of the Registration Statement on Form S-1, and in all subsequent amendments and post-effective amendments or supplements thereto, with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of AirSculpt Technologies, Inc. in the Registration Statement and any and all amendments and supplements thereto. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.
Dated: October 20, 2021
By: | /s/ Kenneth Higgins | |
Name: | Kenneth Higgins |
Exhibit 99.4
Consent to be Named as a Director Nominee
In connection with the filing by AirSculpt Technologies, Inc. of the Registration Statement on Form S-1, and in all subsequent amendments and post-effective amendments or supplements thereto, with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of AirSculpt Technologies, Inc. in the Registration Statement and any and all amendments and supplements thereto. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.
Dated: October 20, 2021
By: | /s/ Pamela Netzky | |
Name: | Pamela Netzky |