Exhibit 10.4


 


FORM OF US ONCOLOGY HOLDINGS, INC.

RESTRICTED STOCK AWARD AGREEMENT

UNDER THE 2004 EQUITY INCENTIVE PLAN


 


 


This
Restricted Stock Award Agreement (this “Agreement”) is made as of
August 20, 2004 (the “Effective Date”), between US Oncology Holdings,
Inc., a Delaware corporation (the “Company”), and [                    ] (the “Participant”).


 


WHEREAS, the
Company has adopted the 2004 Equity Incentive Plan (the “Plan”), all of
the terms and provisions of which are incorporated herein by reference and made
a part hereof;


 


WHEREAS, the
Company or a Subsidiary thereof has retained the Participant to provide
valuable services to the Company and its Subsidiaries;


 


WHEREAS, in
order to provide an incentive to the Participant in respect of his employment
with or other service to the Company and its Subsidiaries, the Company has
approved and authorized the issuance of certain shares of the Common Stock of
the Company, par value $0.001 per share (the “Stock”), to the
Participant, subject to the terms of the Plan and this Agreement; and


 


WHEREAS, all
capitalized terms used but not defined herein shall have the meanings set forth
in the Plan.


 


NOW,
THEREFORE, in consideration of the services rendered and to be rendered by the
Participant, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Participant
agree to the terms and conditions set forth herein.


 


1.             Award of
Restricted Stock.  Subject to the
Participant’s execution and delivery of the Stockholders Agreement dated as of
August 20, 2004 among the Company and its stockholders party thereto, the
Company hereby awards and issues to the Participant, effective as of the date
hereof, [                 ] shares of
Stock (the “Restricted Stock”).


 


2.             Vesting Schedule.


 


(a)           Subject
to the further provisions of this Agreement, [            ] shares of the Restricted Stock shall vest as set
forth below:


 


	
  Vesting Date

  	
   

  	
  Cumulative Shares of Restricted Stock

  Vested After Such Vesting Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  August 20,
  2005

  	
   

  	
  [                   ]

  	
   

  
	
  August 20,
  2006

  	
   

  	
  [                   ]

  	
   

  
	
  August 20,
  2007

  	
   

  	
  [                   ]

  	
   

  
	
  August 20,
  2008

  	
   

  	
  [                   ]

  	
   

  
	
  August 20,
  2009

  	
   

  	
  [                   ]

  	
   

  



 






















 


(b)           Subject
to the further provisions of this Agreement, the remaining [            ] shares of the Restricted Stock
shall vest on August 20, 2009. 
Notwithstanding the preceding sentence, the shares of Restricted Stock
described in the preceding sentence shall vest at earlier dates, in the amounts
and under the conditions as set forth below:


 


(i)                                     If
the results of any fiscal year of the Company beginning with the fiscal year
ending December 31, 2004 are such that ROIC equals or exceeds Forecast
ROIC for such fiscal year, then 130,000 shares of Restricted Stock subject to
vesting under this Section 2(b) that have not yet vested shall
vest.


 


(ii)                                  If
the results of the Company’s fiscal year ending December 31, 2006 or any
fiscal year thereafter are such that ROIC equals or exceeds Forecast ROIC for
such fiscal year, then all shares of Restricted Stock subject to vesting under
this Section 2(b) that have not yet vested shall vest.


 


(iii)                               Any
vesting under this Section 2(b) shall occur when the Committee
determines that the condition described in Section 2(b)(i) or (ii)
has been satisfied, which determination shall be made not later than
March 31 of the fiscal year following the fiscal year for which the
determination is being made.


 


(iv)                              “Accreted
Value” has the meaning provided for such term in the Company’s Amended and
Restated Certificate of Incorporation.


 


“Approved
One Time Items” means one-time or non-recurring charges to the Company’s
earnings, gains or losses which the Committee, in its sole discretion,
reasonably determines should appropriately be excluded from and not taken into
account in the calculation of EBITDA because they do not arise from the
Company’s normal operating activities, including without limitation, and only
as examples, (w) charges or expenses incurred as a result of or in connection with
the merger of a subsidiary of the Company with and into US Oncology, (x)
charges or gains resulting from prepayment of financings, (y) writeoffs of
long-term assets or (z) gains or losses upon dispositions of assets.


 


“Average
Capital Employed” means, for any fiscal year, the arithmetic mean of the
Capital Employed at the opening of business on the first day of the fiscal year
and at the close of business on the last day of each fiscal quarter ending
within the fiscal year.


 


“Capital
Employed” means, as of any date, the excess of (x) the sum of (A) the
Common Equity Value, plus (B) the Preferred Equity Value, plus (C) the
Outstanding Debt, over (y) the Company’s consolidated cash and cash
equivalents.


 


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“Common
Equity Value” means, as of any date, the aggregate consideration paid to
the Company in respect of the issuance of the shares of Stock then outstanding
and the Conversion Constant Shares issuable in respect of the shares of
Preferred Stock then outstanding (but excluding any other shares issuable or
issued upon conversion of or otherwise in exchange for the Preferred Stock); provided,
that Stock issued in exchange for or in respect of services provided or to be
provided to the Company shall be deemed to have been issued for no
consideration for purposes of the determination of Common Equity Value.  For the avoidance of doubt, Common Equity
Value shall equal $1 in respect of (x) each share of Stock purchased pursuant
to the Subscription Agreement and (y) the Conversion Constant Shares issuable
in respect of each share of Preferred Stock purchased pursuant to the
Subscription Agreement.


 


“Conversion
Constant Shares” means a number of shares of Stock equal to the Conversion
Constant, as defined in the Company’s Amended and Restated Certificate of
Incorporation.


 


“EBITDA”
means, for any period, the Company’s consolidated earnings before interest,
taxes, depreciation, amortization, any other non-cash charges and Approved One
Time Items, based upon the Company’s regularly prepared quarterly and annual
financial statements, adjusted as necessary to reflect the application of the
generally accepted accounting principles utilized by US Oncology in connection
with the preparation of its 2003 annual financial statements.


 


“Forecast
ROIC” means, for any fiscal year, or portion thereof, the percentage set
forth below:


 


	
  Fiscal Year

  	
   

  	
  Forecast ROIC

  
	
  2004

  	
   

  	
  14.5%

  
	
  2005

  	
   

  	
  12.5%

  
	
  2006 and
  thereafter

  	
   

  	
  14.2%

  



 


“Outstanding
Debt” means, as of any date, the Company’s consolidated outstanding debt,
minus any accrued and unpaid interest thereon, determined in accordance with
the generally accepted accounting principles utilized by US Oncology in
connection with the preparation of its 2003 annual financial statements, and
including obligations and liabilities under any synthetic leasing facilities.


 


“Preferred
Equity Value” means, as of  any
date, the aggregate Accreted Value of all shares of Preferred Stock then
outstanding.


 


“Preferred
Stock” means the Company’s Participating Preferred Stock, par value $0.001
per share.


 


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“ROIC”
means, for any fiscal year, the quotient, expressed as a percentage, of (x)
EBITDA divided by (y) Average Capital Employed.


 


“Subscription
Agreement” means the Stock Subscription and Exchange Agreement dated as of
August 20, 2004 among the Company and the Purchasers named therein.


 


“US
Oncology” means US Oncology, Inc., a Delaware corporation.


 


Subject to Section 6
hereof, the period beginning on the date hereof through and including the
vesting date for any shares of Restricted Stock shall be referred to herein as
the “Restricted Period” with respect to such shares of Restricted Stock.


 


3.             Transferability.   Shares of Restricted Stock which have not vested may not be sold,
assigned, transferred, pledged, or otherwise disposed of under any
circumstances during the applicable Restricted Period unless otherwise provided
by the Plan.  The Restricted Stock shall
not be subject to execution, attachment or similar process during the
applicable Restricted Period.  Upon any
attempt to transfer, assign, pledge, or otherwise dispose of the Restricted
Stock during the applicable Restricted Period contrary to the provisions of the
Plan or this Agreement, or upon the levy of any attachment or similar process
upon the Restricted Stock during the applicable Restricted Period, the
Restricted Stock shall immediately be forfeited to the Company and cease to be
outstanding.


 


4.             Investment
Representation.


 


(a)           The
Restricted Stock is awarded under this Agreement at a time when there is not in
effect under the Securities Act of 1933, as amended (the “Securities Act”),
a registration statement relating to the shares of Restricted Stock awarded and
there is not available for delivery to the Participant a prospectus meeting the
requirements of Section 10(a)(3) of the Securities Act.  The Participant represents and agrees that
(i) the Participant is acquiring the shares of Restricted Stock for the purpose
of investment and not with a view to their resale or distribution and (ii)
prior to selling or offering for sale any such shares, the Participant will
furnish the Company with an opinion of counsel satisfactory to the Company to
the effect that such sale may lawfully be made and will furnish it with such
certificates as to factual matters as it may reasonably request.


 


(b)           Certificates
representing shares of Restricted Stock shall be marked with the following
legend or any other legend which counsel for the Company considers necessary or
advisable to comply with the Securities Act and the other provisions of this
Agreement relating to the transfer of Stock:


 


“The shares of
stock represented by this certificate have not been registered under the
Securities Act of 1933 or under the securities laws of any state and may not be
sold or transferred except upon such registration or upon receipt by the
Company of an opinion of counsel satisfactory to the Company that registration
is not required for such sale or transfer.”


 


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(c)           The
Company may, but except as provided in the Registration Rights Agreement dated
as of August 20, 2004 among the Company and its stockholders party thereto
(the “Registration Rights Agreement”) shall in no event be obligated to,
register the Restricted Stock pursuant to the Securities Act, and in the event
any shares of Restricted Stock are so registered the Company may remove any
legend on certificates representing such shares of Restricted Stock.  Except as provided in the Registration
Rights Agreement, the Company shall not be obligated to take any affirmative
action in order to cause the issuance of shares of Restricted Stock pursuant
hereto to comply with any law or regulation of any governmental authority.


 


5.             Forfeiture of
Restricted Stock.  Any shares of
Restricted Stock issued pursuant to this Agreement which have not vested shall
immediately be forfeited to the Company and cease to be outstanding upon the
termination, for any reason, of the Participant’s employment and service with
the Company and all its Subsidiaries.


 


6.             Acceleration of
Vesting Upon Change of Control or IPO.


 


(a)           Upon
a Change of Control all Restricted Periods shall terminate, all Restricted
Stock shall be vested in full and all limitations on the Restricted Stock set
forth in this Agreement shall automatically lapse.


 


(b)           Upon
a Qualified IPO, the Restricted Periods shall terminate to the extent necessary
to cause the accelerated vesting and termination of the Restricted Periods with
respect to 50% of all shares of Restricted Stock remaining unvested immediately
prior to the application of this Section 6(b), first terminating
the Restricted Periods of and vesting Restricted Stock subject to vesting under
Section 2(a), in inverse  order
of vesting date, before terminating the Restricted Periods of and vesting
Restricted Stock subject to vesting under Section 2(b).


 


7.             Federal Income Tax
Election.  Within 30 days after the
date of this Agreement, the Participant shall make an election with the
Internal Revenue Service under Section 83(b) of the Internal Revenue Code
of 1986, as amended (the “Code”), and the regulations promulgated
thereunder, and thereafter the Participant shall provide the Company with a
copy of such election.


 


8.             Reimbursement for
Taxes.  Upon the termination of the
Participant’s employment by the Company and all its Subsidiaries for any reason
other than the Participant being Terminated for Cause, the Company shall
reimburse the Participant for the amount of any income and employment related
taxes payable or paid by the Participant as the result of the Participant’s
election under Section 83(b) of the Code with respect to shares of
Restricted Stock which are forfeited as the result of such termination of the
Participant’s employment (the “Reimbursement”).  The Participant shall also receive an
additional payment in an amount such that after payment by or on behalf of the
Participant of all income and employment related taxes on the Reimbursement and
the payment described in this sentence, the Participant is in the same
financial position that the Participant would have been had no portion of the
Reimbursement been subject to any such taxes. 
Any payment required to be paid by the Company under this Section 8
which is not paid within five days of receipt by the Company of the
Participant’s


 


5






















 


demand
therefor shall thereafter be deemed delinquent, and the Company shall pay to
the Participant immediately upon demand interest at the highest nonusurious
rate per annum allowed by applicable law from the date such payment becomes
delinquent to the date of payment of such delinquent sum.


 


9.             Tax
Indemnification.  Following any
Final Determination of Additional Taxes, the Company hereby agrees to indemnify,
defend and hold harmless the Participant from and against, and will pay the
amount of, any and all Additional Taxes up to but not in excess of the Company
Tax Benefit.


 


“Final
Determination” shall mean shall mean (i) a decision, judgment, decree or
other order by any court of competent jurisdiction, which decision, judgment,
decree or other order has become final (i.e., when all allowable appeals have
been exhausted by either party to the action or the time for filing such
appeals has passed); (ii) any settlement agreement entered into in connection
with any administrative or judicial proceeding, including but not limited to, a
closing agreement entered into pursuant to Section 7121 of the Code or
(iii) the expiration of the time for instituting a claim for refund, or if such
a claim was filed, the expiration of the time for instituting suit with respect
thereto.


 


“Additional
Taxes” shall mean the additional federal, state and local taxes, plus all
applicable penalties and interest, assessed against the Participant resulting
from or arising out of a dispute as to the fair market value of the Restricted
Stock on the date of its issuance to the Participant (determined without regard
to any lapse restriction, as defined in Treasury Regulation Section 1.83-3(i)).


 


“Company
Tax Benefit” shall mean the amount of the reduction in the Company’s
federal, state and local taxes, plus any applicable interest on any refunds
resulting from any such reduction, arising from a Final Determination of
Additional Taxes.  To the extent that as
a result of net operating losses, including a carryover or carryback of any net
operating losses, any part of the reduction in the Company’s federal, state and
local taxes is not realized until a tax year following the tax year in which the
Company received a tax deduction as the result of the Participant’s election
under Section 83(b) of the Code (“83(b) Election Year”), but not
later than the tax year in which the Final Determination of Additional Taxes
falls (“Future Tax Benefit”), then the Company Tax Benefit shall include
only the present value of the Future Tax Benefit, discounted from the last day
of the tax year in which the Future Tax Benefit is realized to the last day of
the 83(b) Election Year using a discount rate equal to the overpayment rate
determined in accordance with Section 6621(a)(1) of the Code.  The Company Tax Benefit will not include the
amount of any reduction in federal, state or local taxes that will not be
realized until after the tax year in which the Final Determination of
Additional Taxes falls.


 


10.           Plan Governing.  The Participant hereby acknowledges receipt
of a copy of the Plan and accepts and agrees to be bound by all of the terms
and conditions of the Plan as if set out verbatim in this Agreement.  In the event of a conflict between the terms
of the Plan and the terms of this Agreement, the terms of the Plan shall
control.


 


11.           Miscellaneous.  This Agreement may be amended only by
written agreement of the Participant and the Company and may be amended without
the consent of any other person.


 


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The provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors, representatives, heirs, descendants,
distributees and permitted assigns. 
This Agreement may be executed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.


 


 


[Signature page follows]


 


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IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the Effective Date.


 


 


	
   

  	
  US ONCOLOGY HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  [                   ]

  



 


 


	
   

  	
  PARTICIPANT:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [                   ]

  



 


 


SIGNATURE PAGE TO RESTRICTED
STOCK AWARD AGREEMENT