Document:

fs12010ex10vi_internalfix.htm

Exhibit 10.6

 

EMPLOYMENT AGREEMENT

 

This AGREEMENT made as of October 1, 2010, by and between INTERNAL FIXATION SYSTEMS, INC., a Florida corporation having its principal office at 5901 SW 74th Street, Suite 408, South Miami, Florida 33143 (hereinafter referred to as the "Company"), and Matthew Endara, currently residing at 17125 SW 81St Court Miami, Fl 33157, (hereinafter referred to as "Employee").

W I T N E S S E T H

 

WHEREAS, the Company desires to employ Employee, and Employee desires to be employed by the Company, pursuant to the terms and conditions hereof;

NOW THEREFORE, in consideration of the premises and of the mutual promises herein contained, the parties hereto agree as follows:

 

1.           EMPLOYMENT.  The Company hereby employs Employee and Employee hereby agrees to be employed by the Company, subject to the terms and conditions hereinafter set forth.

 

2.           TERM.  The initial term of this Agreement shall begin on the date hereof (the "Employment Date") and shall continue for a period of three (3) year from that date, subject to prior termi­nation in accordance with the terms hereof.  Thereafter, the term of this Agreement may be extended for two (2) additional one-year terms, at the sole option of the Company, and such other additional periods as shall be mutually agreed to in writing by Employee and the Company.

 

3.           DUTIES.  The Employee shall perform such duties and functions as are deter­mined from time to time by the Board of Directors of the Company. In the performance of his duties, Employee shall comply with the policies of and be subject to the reasonable direction of the Board of Directors of the Company.

 

The Employee agrees to devote sufficient working time, attention and energies to the performance of the business of the Company and of any of its subsidiaries or affiliates by which he may be em­ployed; and Employee shall not, directly or indirectly, alone or as a member of any partnership, or as an officer, director or employee of any other corporation, partnership or other organiza­tion, be actively engaged in or concerned with any other duties or pursuits which interfere with the performance of his duties hereunder.

 

4.           COMPENSATION.  As compensation for the services to be rendered by Employee hereunder, the Company agrees to pay or cause to be paid to Employee, and Employee agrees to accept, an annual salary of One Hundred Twenty Five Thousand Dollars ($125,000) payable in bi-weekly installments.  The Company shall also grant to the Employee, effective as of the date of this Agreement, stock options (the "Options") to pur­chase up to One Hundred Fifty Thousand (150,000) shares of the Company's common stock at an exercise price of  Twenty Cents (20 cents) per share.  The Options shall not be exercisable in any respect until the first anniversary of their date of grant and shall thereafter be exercisable over a three-year period in accordance with the following vesting sched­ule:

  

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	 	 Anniversary Date of Grant  	 Number of Vested Shares	 
	 	 	 	 
	 	 First Anniversary Date 	 50,000 (or 33.3%)	 
	 	 Second Anniversary Date	 50,000 (or 66.6%)	 
	 	 Third Anniversary Date	 50,000 (or 100%)	 

                                                             

6.           ADDITIONAL COMPENSATION.  The Company may also pay Employee such other addition­al compen­sation as may from time to time be deter­mined by the Company.  It is anticipated that the Board shall yearly set aside a Bonus Pool of 10% of the year over year EBITDA as calculated prior to any distribution of the Bonus Pool. Fifty percent of the Bonus Pool shall serve as bonuses of Executive Officer and the rest shall be distributed over the rest of the employees pursuant to Company Policy as may be adopted and changed by the Board of Directors.

 

7.           EMPLOYEE BENEFITS. During the period Employee is employed hereunder, Employee shall be permitted to participate in all group health, hospitalization and disability insurance programs, pension plans and similar benefits that are now or may become available to employees of the Company.

During the period Employee is employed hereunder, Employee shall be entitled to vacations in accordance with the vacation policy of the Compa­ny.

Employee shall be entitled to a car allowance of $650.00 per month in lieu of being compensated on a mileage basis.

 

8.            REIMBURSEMENT OF EXPENSES.  ..During the period Employee is employed hereunder, the Company shall reimburse Employee for reasonable and necessary out-of-pocket expenses advanced or expended by Employee or incurred by him for or on behalf of the Company in connection with his duties hereunder in accordance with its customary policies and practices; provided, however, that Employee shall not expend or incur any such expenses, individually or in the aggregate, in excess of Three Hundred Dollars $300.00 without the prior approval of the Chairman of the Board or Chief Employee Officer of the Company.  In this regard, during the Employment Period, Employee shall receive a monthly car allowance of Six Hundred Fifty Dollars ($650.00) in lieu of the expenses associated with the operation of his own automobile.

9.           TERMINATION OF EMPLOYMENT; EFFECT OF TERMINATION.

 

(a)           The Employee's employment hereunder may be termi­nated at any time upon written notice by the Company, upon the occurrence of any of the following events:

	
  

	
(i)

	
the death of Employee;

	
  

	
(ii)

	
the disability of Employee (as defined in paragraph (b)); or

	
  

	
(iii)

	
the determination that there is cause (as hereinafter defined) for such termina­tion upon thirty (30) days' prior written notice to Employee.

 

(b)           For purposes hereof, the term "disability" shall mean the inability of Employee, due to illness, accident or any other physical or mental incapacity, to perform his duties in a normal manner for a period of three (3) consecutive months or for a total of six (6) months (whether or not consecu­tive) in any twelve (12) month period during the term of this Agreement.

 

  

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(c)           For purposes hereof, "cause" shall mean and be limited to (i) Employee's conviction (which, through lapse of time or otherwise, is not subject to appeal) of any crime or offense involving money or other property of the Company or its subsidiaries or which constitutes a felony in the jurisdiction involved; (ii) Employee's performance of any act or his failure to act, for which if he were prosecuted and convicted, a crime or offense involving money or property of the Company or its subsid­iaries, or which would constitute a felony in the jurisdiction involved would have occurred, (iii) Employee's breach of any of the representa­tions, warranties or covenants set forth in this Agreement, or (iv) Employee's continu­ing, repeated, willful failure or refusal to perform his duties re­quired by this Agree­ment, provided that Employee shall have first received written notice from the Company stating with specificity the nature of such failure and refusal and affording Employee an opportunity, as soon as practicable, to correct the acts or omissions com­plained of.  Whether or not "cause" shall exist in each case shall be determined by the Board of Directors of the Company in its sole discretion.

 

(d)           In the event that the Employee's employment is termi­nat­ed for cause, Employee will be entitled to only his accrued salary through the termination date and nothing more.  In the event the Employee’s employment is terminated by the Company for any reason other than cause, Employee shall receive severance equal to one (1) year’s salary {and benefits}.

 

10.           REPRESENTATIONS AND AGREEMENTS OF EMPLOYEE.   The Employee represents and warrants that he is free to enter into this Agreement and to perform the duties required hereunder, and that there are no employment contracts, restric­tive covenants or other restrictions prevent­ing the performance of his duties hereunder.

11.           NON-COMPETITION.

 

(a)           Employee agrees that if his employment is termi­nated for any reason or if he leaves the employ of the Company for any reason, for a period of three (3) years from the date of such termination of employment, he will not directly or indirect­ly, as owner, partner, joint venture, stockholder, employee, broker, agent, principal, trustee, corporate officer or director, licensor or in any capacity whatsoever engage in, become finan­cially interested in, be employed by, render consulting services to, or have any connection with, any business which is competi­tive with the business activities of the Company or its subsid­iaries ("Competitive Business"), in any geographic area where, during the time of his employment, the business of the Company or any of its subsidiaries is being or had been conducted in any manner whatsoever, or hire or attempt to hire for any Competitive Business any employee of the Company or any subsidiary thereof, or solicit, call on or induce others to solicit or call on, directly or indirectly, any customers or prospective custom­ers of the Company for the purpose of inducing them to purchase or lease a product or service which may compete with any product or service of the Company; provided, however, that Employee may own any securities of any corporation which is engaged in such business and is publicly owned and traded but in an amount not to exceed at any one time one percent of any class of stock or securities of such company.

 

(b)           If any portion of the restrictions set forth in paragraph (a) should, for any reason whatsoever, be declared invalid by a court of compe­tent jurisdiction, the validity or enforceability of the remainder of such restrictions shall not thereby be adversely affected.

 

(c)           The Employee declares that the foregoing territo­rial and time limitations are reasonable and properly required for the adequate protection of the business of the Company.  In the event any such territorial or time limitation is deemed to be unreasonable by a court of competent jurisdiction, Employee agrees to the reduction of either said territorial or time limitation to such area or period which said court shall have deemed reasonable.

 

  

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(d)           The existence of any claim or cause of action by Employee against the Company or any subsidiary other than under this Agreement shall not constitute a defense to the enforcement by the Company or any subsidiary of the foregoing restrictive covenants, but such claim or cause of action shall be litigated separately.

12.           NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.

 

(a)           The Employee shall not, during the term of this Agreement, and at any time following termination of this Agree­ment, directly or indirectly, disclose or permit to be known, to any person, firm or corporation, any confidential information acquired by him during the course of or as an incident to his employment hereunder, relating to the Company or any of its subsidiaries, the directors of the Company or its subsidiaries, any client of the Company or any of its subsidiaries, or any corporation, partnership or other entity owned or controlled, directly or indirectly, by any of the forego­ing, or in which any of the foregoing has a beneficial interest, including, but not limited to, the business affairs of each of the foregoing.  Such confidential information shall include, but shall not be limited to, proprietary information, trade secrets, know-how, market studies and forecasts, competitive analyses, the substance of agreements with clients and others, client lists and any other documents embodying such confidential information.

 

(b)           All information and documents relating to the Company, its affiliates as hereinabove described (or other business affairs) shall be the exclusive property of the Company, and Employee shall use his best efforts to prevent any publica­tion or disclosure thereof.  Upon termination of Employee's employment with the Company, all documents, records, reports, writings and other similar documents containing confidential information, including copies thereof, then in Employee's possession or control shall be returned and left with the Compa­ny.

 

13.           RIGHT TO INJUNCTION.  The Employee recognizes that the services to be rendered by him hereunder are of a special, unique, unusual, extraordi­nary and intellectual character involv­ing skill of the highest order and giving them peculiar value, the loss of which cannot be adequately compensated for in damag­es.  In the event of a breach of this Agreement by Employee, the Company shall be entitled to injunctive relief or any other legal or equitable remedies.  Employee agrees that the Company may recover by appropriate action the amount of the actual damage caused the Company by any failure, refusal or neglect of Employee to perform his agreements, representations and warranties herein contained.  The remedies provided in this Agreement shall be deemed cumulative and the exercise of one shall not preclude the exercise of any other remedy at law or in equity for the same event or any other event.

14.           AMENDMENT OR ALTERATION.  No amendment or alteration of the terms of this Agreement shall be valid unless made in writing and signed by both of the parties hereto.

 

15.           GOVERNING LAW.  All matters concerning the validity, construction, interpretation and performance under this Agreement shall be governed by the laws of the State of Florida, without giving effect to any conflict of laws principles thereunder.

 

  

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16.           SEVERABILITY.  The holding of any provision of this Agreement to be illegal, invalid or unenforceable by a court of competent jurisdiction shall not affect any other provision of this Agreement, which shall remain in full force and effect.

 

17.           NOTICES.  Any notices required or permitted to be given hereunder shall be sufficient if in writing, and if delivered by hand or sent by certified mail to the addresses set forth above or such other address as either party may from time to time designate in writing to the other, and shall be deemed given as of the date of the delivery or mailing.

 

18.           WAIVER OR BREACH.  It is agreed that a waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by that same party.

 

19.           ENTIRE AGREEMENT AND BINDING EFFECT.  This Agreement contains the entire agreement of the parties with respect to the subject matter hereof and shall be binding upon and inure to the benefit of the parties hereto and their respective legal repre­sentatives, heirs, distributees, successors and assigns.

 

20.           ASSIGNMENT.  This Agreement may not be transferred or assigned by either party without the prior written consent of the other party; provided, however, that if the Company transfers the IFS’s business to a new corporation formed as the succes­sor-in-interest to the Company ("Newco"), the Company shall be entitled to assign all of its rights and obligations hereunder to Newco and thereafter all references to the Company herein will apply to, and be deemed to refer to, Newco.

21.           SURVIVAL.  The termination of Employee's employment hereunder shall not affect the enforceability of Sections 10 and 11 hereof.

 

22.           FURTHER ASSURANCES.  The parties agree to execute and deliver all such further instruments and take such other and further action as may be reasonably necessary or appropriate to carry out the provisions of this Agreement.

 

23.           HEADINGS.  The Section headings appearing in this Agreement are for purposes of easy reference and shall not be considered a part of this Agreement or in any way modify, amend or affect its provisions.

 

24.           COUNTERPARTS.  This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together, shall constitute one instrument.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written.

	INTERNAL FIXATION SYSTEMS, INC.	 	 	 	 
	 	 	 	 	 	 
	By:	
/s/ Stephen J. Dresnick

	 	 	
Matt Endara

	 
	Name:	
Stephen J. Dresnick

	 	 	

Matt Endara

	 

  

 

5fs12010ex10vii_internalfix.htm

Exhibit 10.7

 

FIRST AMMENDED AND RESTATED SHAREHOLDERS' AGREEMENT

INTERNAL FIXATION SYSTEMS, INC.

10100 N.W. 116th Way Suite 18

Medley, Florida

 

A Florida Corporation

 

Kenneth C. West

Matthew Endara

Christopher Endara

Dr. Jaime Carbonell

Dr. Stephen J. Dresnick

Dated: May 15, 2009

 

  

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SHAREHOLDERS' AGREEMENT

 

THIS SHAREHOLDERS AGREEMENT (the "Agreement”) is made and entered into as of this 15th day of May, 2009 (''Effective Date"), by and among Internal Fixations Systems, Inc. (the "Company”), Matt Endara ("Mendara"), Kenneth C. West ("West"), Dr. Jaime Carbonell ("Carbonell"), Christopher Endara ("Cendara"), and Dr. Stephen Dresnick ("Dresnick"). In this Agreement, Mendara, West, Cendara, Carbonell, and Dresnick are also referred to collectively as "Shareholders", and individually as "Shareholder."

RECITALS

WHEREAS, the Company has had 1000 shares of issued and .outstanding capital stock ("Shares"), and WHEREAS the Company has redeemed the stock held by Esteban Hernandez and the Company and the Shareholders have entered into the Agreement whereby Dresnick would make an investment into the company and become a Shareholder, as of this First Ammeded and Restated Shareholder Agreement, the current shareholders who are the beneficial owners Shareholders are and record of the Shares

described in Schedule "A"; and

WHEREAS, the number of Shares owned by each Shareholder and the share certificate number for the Shares owned by each Shareholder are set forth on Schedule A attached to this Agreement; and

WHEREAS, the directors of the Company ('Directors") are set forth on Schedule "'El' to this Agreement; and

WHEREAS, the Shareholders and the Directors have determined that it 'is -necessary and appropriate for certain matters concerning the operations of the Company and the control and disposition of the Shares to be set forth, approved, and ratified- in this Agreement; and

WHEREAS,, the provisions of this Agreement will control to the extent this Agreement conflicts with the Company's Bylaws.

NOW, THEREFORE,. in consideration of the foregoing and the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree. As follows:

  

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ARTICLE I

FORMATION

1. 1         Formation. The Shareholders formed the Company for the purposes and scope set forth in this Agreement and the Company's Bylaws.

1.2          Business of the Company. The business of the Company is to manufacture, distribute and/or self surgical implants. While a Shareholder and/or Director of the Company, each Shareholder and/or Director shall have an affirmative duty to present to the Company all business opportunities concerning surgical implant manufacturing distribution / sales, operations, etc. The Company shall have a right of first refusal with respect to any Related Business Opportunities presented by a Shareholder and/or Director. If the Company declines to proceed with acting on any Related Business Opportunity, the presenting Shareholder and/or Director may not pursue such Related Business Opportunity.

1.3          Shares Subject to this Agreement. The Shares subject to this Agreement shall be all of the present and hereafter authorized and/or issued and outstanding shares of the company.

1.4          Endorsement on Share Certificates. Upon the execution of this Agreement, the certificates representing Shares subject to this Agreement shall be endorsed as follows:

Any sale, assignment, transfer, pledge or other disposition of the shares of stock represented by this certificate is restricted by, and subject to; the terms and provisions of a Shareholders’ Agreement, as of May 15, 2009, a copy of which is on file in the office of the Company and in the stock book thereof By acceptance of this certificate, the holder hereof agrees to be bound by the terms of said Agreement.

 

1.5          Limitation on Shareholders’ Right to Pledge Stock. No Shareholder or party shall have the right to pledge or hypothecate any shares owned by him or her, except as collateral for a note (i) in favor of the Company or any one or more of the other shareholders; or (ii) in favor of a recognized lending institution, but only if the proceeds of the loan are used in their entirety to purchase additional shares of the Company and the borrowing shareholder delivers to the Company and to the other shareholders the written undertaking of the lender, in form acceptable to the Company and the other shareholders that the lender will not take possession or dispose of the shares without first affording the Company and the other shareholders the right for a period of ninety (90) days to purchase such shares pursuant to sections 3.2 through 3.8 of this Agreement at the price determined pursuant to section 9.7 of this Agreement.

  

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ARTICLE II

CONTRIBUTIONS

2.1          Contribution. The initial contribution in consideration of the shares to be received by each shareholder pursuant hereto shall be in the amount of One Hundred Dollars ($100.00) per share. The Company shall notify each of the Shareholders of any and all contributions to the Company ("Contributions") by each of the Shareholders.

2.2          Dresnick Contribution. Dresnick will advance cash sufficient to fund the business plan which has been agreed to by all of the Shareholders. Such cash advances shall be solely at the discretion of Dresnick. At Dresnick’s option, he may personally guarantee any equipment purchases along with the other Shareholders instead of advancing additional cash. If financing such equipment leads to a monthly deficit of cash flow, then Dresnick would be obligated to fund the cash loss to the maximum extent which would have been required under the business plan. The Parties agree that the amount advanced pursuant to this paragraph to date has been $40,000.  Such advances shall be considered a loan which shall accrue interest at 12% annually, compounded monthly on the amount of loan outstanding as of the last day of each month. Interest shall accrue  but payment will be deferred until cash flow of the Company is adequate to make principal payments

2.1          Additional Internal Capital.  The Shareholders shall contribute additional capital to the Company in such amounts and at such time as the Board of Directors shall determine that additional capital is required to perform the business of the Company, to pay its expenses or to maintain a reserve (a "Capital Call). The Shareholders shall contribute any such additional capital as and when reasonably determined by the Board of Directors. Upon such determination, the Company shall give written notice to each Shareholder. The obligation of the Shareholders to make additional capital contributions and pay the Capital Call is not intended to grant rights to any Persons other than the Company to compel such contributions. The Shareholders shall pay the Capital Call in proportion to their respective Shareholder interests. Each Shareholder shall have fourteen (14)' days from the date such notice is given to contribute such Shareholder's share of the. Capital Call to the Company. Each Shareholder shall receive a credit to such Shareholder's Capital Account in the amount of any additional capital contributed by such Shareholder- to the Company. If a Shareholder cannot meet the required additional capital contribution and fails .to pay the Capital Call as and when required by the Company (the ' ."'Defaulting Shareholder"), the remaining Shareholders may contribute the required additional capital on behalf of the Defaulting Shareholder (the "Contributing Shareholders"). In such event, the Contributing Shareholders may elect to either treat the additional capital contribution as a loan. to the Defaulting Shareholder, secured by the Defaulting Shareholders shares in the Company and payable with interest at the prime rate of U.S. money center commercial banks as .published in The Wall Street Journal and due and payable thirty (30) days following demand, or, in the alternative, may reduce from the' Defaulting Shareholder's Capital Account a portion of such Shareholder in the. Company corresponding with twice (200%) of the amount advanced on behalf, of the Defaulting Shareholder, and add to the Contributing Shareholder's Capital Account that  same amount deducted from the Defaulting Shareholder. Each Shareholder does hereby grant each other Shareholder a security interest in such Shareholder's shares to secure any loan made hereunder.

 

  

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2.2          Additional External Capital. In the event the Board of Directors feels that  raising external capital  is more advantageous then raising internal capital pursuant to paragraph 2.2 above, then the Company shall retain the services of an outside organization to raise such funds, Dresnick shall be given the first right of refusal to take on such a project.

 

ARTICLE III

TRANSFER OF SHARES

3.1          Restriction Against Transfer of Shares- Other than Transfers (as defined below) to another Shareholder or a Shareholder's immediate family member (or an entity formed and controlled by such immediate family member), no Shareholder (including any person or entity who becomes a Shareholder subsequent to the Effective Date) shall sell, transfer, assign, encumber, alienate or in any way dispose of ('Transfer') all or any Shares or rights or interests in any Shares, which they may now own or hereafter acquire, without the prior written consent of a majority of the other Shareholders. Any purported Transfer in violation of this Section or any other provision of this Agreement shall be void and ineffectual and shall not operate to Transfer any interest or title to the purported transferee ("Transferee"). For purposes of this Agreement, a Transfer shall include, without limitation, any transfer of legal or beneficial ownership, whether by voluntary or involuntary, sale, transfer, assignment, encumbrance, alienation or other disposal, including a foreclosure under any pledge, hypothecation or similar credit transaction or by divorce or separation decree.

3.2          Offer to Transfer Shares. A Shareholder seeking to Transfer their Shares ('Transferor'), shall provide any offer to Transfer ("Offer") their Shares to the Company and all other Shareholders, in the manner set forth in this Agreement, and shall state that the Transferor offers to Transfer their Shares at the price and on the terms set forth in the Offer. The Offer shall include: a description of the Transfer; the name and address of the bona fide prospective Transferee; the number of Shares involved in the Transfer; the price and terms of the proposed Transfer; and a copy of the bona fide written offer from the prospective Transferee.

3.3          Shareholders Acceptance of Offer - First Rigbt. A11 SharehoIders shall have a first right to purchase ("First Right") the Shares, on a pro rata basis, from the Transferor upon the same terms and conditions as presented in the Offer. The Shareholders shall exercise their First Right within thuty (30) days from receipt of the Off', and such exercise shall be done by written acceptance to the Transferor. If any Shareholder elects not to participate in exercising their First Right, all the other Shareholders may elect to exercise their First Right on a pro rata basis divided among a11 the Shareholders electing to exercise their First Right.

 

  

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3.4          Offer to the Company - Second Right. Following the decision of all the Shareholders, other than the Transferor, not to exercise their First Right p purchase the Transferor's Shares, and upon the written consent: of all the Shareholders, other than the Transferor, the Company shall have a second right to purchase ("Second Right") the Shares from the Transferor upon the same terms and conditions as presented in the Offer. The Company shall exercise its Second Right following the decision of all the Shareholders, other than the Transferor, not to exercise their First Right to purchase the Transferor's Shares, but not later than within ninety (90) days after receipt of the Offer, and such exercise shall be done by written acceptance to the Transferor.

3.5          Closing. Any written acceptance of the Offer by a Shareholder or the Company shall specify a date for the Closing of the purchase., which date shall not be more than thirty (30) days after the date of the giving of the written acceptance. The Closing shall take place at the principal office of the Company or at the office of its legal counsel.

3.6          Rejection of Offer. If all of the Shares subject to the Offer are not accepted for purchase by the Shareholders or the Company as set forth above, the Offer shall be deemed rejected by all the Shareholders and the Company and the Transferor may make a

bona fide Transfer of the Shares per the Offer to the prospective Transferee; provided however, the Transferee must first execute a written acknowledgment (and/or counterpart to this Agreement) that the Transferee will become a Shareholder and a party to this Agreement upon the Closing of the Transfer as if such Transferee had been an original signatory party to this Agreement and that such Transferee agrees to be bound by the terms, restrictions, provisions and conditions of this Agreement.

3.7          Insufficient Capital. In the event that the Company approves the purchase of any Shares, pursuant to the terms of this Agreement and, if the capital of the Company is insufficient (under then existing laws) to authorize the Company to purchase any of such Shares, the Shareholders agree to perform such acts, execute such instruments, and vote their Shares in such manner as may be necessary to increase the Company's capital to an amount sufficient to authorize the purchase of such Shares. In the event such capital is nevertheless insufficient to legally allow the Company to purchase all of such Shares, the Company shall be entitled to delay the consummation of such purchase for a period of up to ninety (90) days during which the Company shall .attempt to obtain the necessary capital. If such capital is still unavailable at the ninety (90) days period set forth in this section, then the Shareholder whose Shares are subject to purchase shall be entitled to sell such Shares to a third party, subject to Article 3 of this Agreement, until such time as the Company obtains the necessary capital.

3.8          Transferee. In the event of any Transfer of Shares, the Transferee shall be a "Shareholder" and shall be bound by the terms, provisions, and conditions of this Agreement as a condition to holding and voting such Shares whether or not such - - Transferee acknowledges to be bound hereby in writing.

 

 

ARTICLE IV

PURCHASE OF SHARES OWNED BY SHAREHOLDERS AT DEATH

4.1          Description of Insurance Policies. In furtherance of the purposes of this Article IV of this Agreement, the Company may purchase life insurance on the lives of each of the Shareholders.The Company shall be the beneficiary of each policy. This Agreement shall include and control all policies purchased pursuant hereto, and such policies shall be recorded on attached Schedule C.

 

  

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4.2          Payment of Life Insurance Premiums. All premiums due on the insurance policies purcha&d as herein provided shall be paid by the Company. If the Company  shall fail to pay any premium within ten (10) days after the due date, the person on whose

life the policy issued may pay such premium, in which event he shall have a right to reimbursement from the Company within ten (10) days.

4.3          Purchase and Sale of Deceased Shareholder's Interest. Upon the death of a Shareholder, the Company shall purchase, and the personal representative and or spouse of the Deceased Shareholder shall sell to the Company, all of the Shares owned by the Deceased Shareholder.

4.4          Valuation of Shares. The purchase price for the Shares to be purchased and sold

hereunder shall be determined as set forth in section 5.1.

4.5          Payment of Purchase Price from Insurance Proceeds. Upon the death of a Shareholder, the Company shall: (i) collect any and all proceeds from insurance policies 'it owns on the life of the Deceased Shareholder, (ii) determine the purchase price for the Shares in accordance with section 9.7 of this Agreement; iii) pay to the Deceased Shareholder's personal representative such amount of the insurance proceeds, if any, equal the purchase price for the Shares. The Company may retain any excess of such insurance proceeds over the purchase price for the Shares.

4.6          Payment of Purchase Price in Excess of Insurance Proceeds. If the Company shall be obligated to pay as the purchase price of any Shares purchased under Article IV  hereof, an amount in excess of the insurance proceeds, if any, the Company may, at its  option, pay such excess in full or in part as soon as the amount thereof is ascertained and the balance, if any, as set forth below. If the Company elects to pay a part of its obligation in installments, it shall give to the Deceased Shareholder's personal representative promissory note(s) for the balance so payable; said note(s) to be payable in one hundred twenty (120) equal monthly installments with interest to be determined annually at the prime lending rate as published in the Wall Street Journal on (i) the date of the Deceased Shareholder's death for the initial year, and (ii) each one year anniversary thereafter. Each note shall provide for the acceleration of the due dates of all unpaid installments on the default in the payment of any one installment.

4.7          Option To Purchase Policies. In the event that a Shareholder shall sell his Shares during his lifetime as provided herein, or in the event of the death of a Shareholder or the termination of this Agreement, the Deceased Shareholder or the remaining Shareholders, as the case may be, shall have the right, exercisable within sixty (60) days, to purchase any insurance policies on their own lives subject to this Agreement.

4.8          Multiple Deaths. In the event the Shareholders all die within a period of thirty (30) days of one another, Article IV of this Agreement shall be inoperative.

 

  

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4.9          Insufficient Corporate Surplus. If the Company shall not have sufficient surplus to permit it lawfully to purchase all of the Shares, the Deceased Shareholder's personal representative and the Surviving Shareholders shall promptly take such measures to vote their respective holding of the Shares to reduce the capital of the Company or to take such other steps as may be appropriate or necessary in order to enable the Company to lawfully purchase and pay for all of such Shares.

4.10        Audits. In order to assure the estate of the Deceased Shareholder that the Company's operations shall be conducted in a manner consistent with any obligations to timely pay for the Shares owned by such Shareholder and any indebtedness owing by the Company to such Shareholder, as long as there is any unpaid balance owing on the aforesaid obligations, the Company shall:

4.10.1    submit quarterly financial statements to the Deceased Shareholder's personal representative;

4.10.2    submit annual financial statements on a compilation basis to the Deceased Shareholder's personal representative;

4.10.3     permit -.the Deceased Shareholder's personal representative to periodically review the books and records of the Company during normal business hours, but not more often than once each quarter in order to verify the accuracy of the financial statements referred to in the foregoing; and

4.10.4      promptly inform the Deceased Shareholder's persona1 representative of any Litigation, claim; or other events that might have a material adverse effect on the Company's financial statements.

ARTICLE IV

BUY/SELL ARRANGEMENT

5.1  In the event the event that the Company fails to meet 60% of its 2010 Business Plan Revenue Projections, Dresnick shall have the right  to Buy-Out all other Shareholders (“Other Shareholders”). Price for the purchase of such shares shall be calculated using EBITDA for the year 2010 times 3. Each Shareholder other than Dresnick shall get his proportionate share of the amount calculated.

5.2  In the event Dresnick fails for whatever reason to fund at the level required in the attached business plan then the Other Shareholders shall have the right to purchase Dresnick’s shares. The price for the purchase of such shares shall be calculated using EBITDA for the 12 months preceding times 4.

  

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ARTICLE V

CORPORATE MANAGEMENT

6.1          Management. The following shall be initial members of Management of the company:

Stephen Dresnick- President

Christopher Endara – VP Manufacturing

Matt Endara – VP

Ken West – VP Sales

None of the above will take salaries initially. Upon unanimous vote of the Board,  each of the individuals other than Dresnick will begin taking salaries as Company’s finances will permit. Dresnick will not begin receiving salaries until each of the individuals above have begun taking salaries and the Company’s cash flow is adequate to cover all of the monthly expenses including their salaries.

6.2          Board of Directors. Company decisions generally shall be made by the Board of Directors. The Board of Directors shall be composed of the following:

Stephen Dresnick, Chairman

Christopher Endara

Matt Endara

Ken West

6.3          Indemnity of the Directors and Officers. The Directors and Officers shall perform their duties in good faith, in a manner reasonably believed by them to be in the best interests of the Company, and with such care as an ordinarily prudent person in a like position would use under similar circumstances. The Company shall, to the maximum extent permitted by law, indemnify the Directors and Officers and make advances for expenses of the Directors and Officers in any proceeding in which a Director or Officer is named or threatened to be named, provided that the applicable Director or Officer furnishes to the Company a written undertaking to repay amounts advanced on his or her behalf if it shall ultimately be determined that, under applicable law, the applicable Director or Officer was not entitled to the benefit of any such

advances.

6.4           Directors' and Officers' Liabilitv Insurance. As soon as possible following the

execution of this Agreement, the Company may seek to obtain adequate Directors and Officers Liability Insurance to cover all of the present and future Directors and Officers for any and ail actions performed by such Directors and Officers pursuant to their duties, in good faith, in a manner reasonably believed by them to be in the best interests of the Company, and with such care as an ordinarily prudent person in a like position would use under similar circumstances.

  

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6.5           Major Decisions. The matters enumerated below shall constitute major decisions (the "Major Decisions") and, notwithstanding anything to the contrary in this Agreement,  the Articles of Association and/or Bylaws, no Shareholder, Director or Officer shall be  authorized to take any action or make any decision within the scope of a Major Decision without   obtaining the written consent of the majority (by percentage of Share ownership) of the Shareholders. ..

	
a.  

	
amend the ,Company's Shareholder's .Agreement or Bylaws;

	
b.  

	
change the number or composition of the Directors on the Company's Board of Directors;

	
c.  

	
declare or pay any cash, stock or other dividend, or other distribution or payment in respect of any Shares or cause the Company, directly or indirectly, to purchase, acquire, redeem, split, combine or re-class  any shares;

	
d.  

	
change the Company's accounting firm;

	
e.  

	
incur more than $5,000 (U.S. Dollars) in indebtedness or additional indebtedness, except for debt incurred in the ordinary course of the Company's business;

	
f.  

	
issue, purchase or sell any Shares or any other securities of the Company;

	
g.  

	
increase or decrease the authorized number of, or chanoe the designated  sequences, qualifications, limitations, restrictions or special relative rights of any of the Shares;

	
h.  

	
obligate the Company as a surety, guarantor or accommodation party on any obligation;

	
i.  

	
issue, grant or sell any security, option, warrant, call, subscription or other right of any kind fixed or contingent, that directly or indirectIy calls for the issuance, sale, pledge or other disposition of any Shares (except as may be issued to a lender to the Company as a part of an approved financing);

	
j.  

	
adopt or approve any operating or capital budgets for hture operations and investments;

	
k.  

	
sell, exchange, lease, assign, transfer, encumber or otherwise dispose of all or substantially all of the assets of the Company;

	
l.  

	
effect a merger, consolidation or statutory share exchange of the Company;

	
m.  

	
acquire, form or fund any affiliates or subsidiaries;

	
n.  

	
voluntarily file a bankruptcy petition for the Company;

	
o.  

	
dissolve or liquidate the Company;

	
p.  

	
make  any loans by the Company;

	
q.  

	
pay any fee, salary or other, compensation to any Shareholder or Shareholder's affiliate or family member, Officer, or Director;

	
r.  

	
make a significant tax election required or permitted by the Code and or applicable law of any taxing authority to which the Company may be subject;

r.      admit additional Shareholders (other than as approved pursuant to Article III of  this Agreement); and

 

  

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s.  

	
authorize the payment of any non-recurring obligations not otherwise approved and within the Company's Operating Budget, as previously established by the Board of Directors, in excess of $5,000..

6.6          Funds of the Company. All finds received by the Company shall be deposited into the Company's bank account(s) as the Board of Directors shall determine.

6.7          Reimbursement of Expenses, The Company shall reimburse Directors, Officers and employees for all reasonable and necessary business expenses incurred as a result of furthering the business of the Company or incurred within the scope of the duties, provided receipts and a detailed accounting of the expenses is provided to the Company prior to the reimbursement and all extraordinary and/or no-recurring expenses in excess of $500 are approved by the Board of Directors.

6.8          Fiscal Year. The Company's fiscal year ("Fiscal Year”) shall be the same as the Calendar Year.

6.9          Accounting Firm. The President/CEO shall choose the Accounting Firm. The President /CEO may hire an internal CFO when the Company’s finances permit.

6.10        Corporate Counsel. The President/CEO shall choose the Company’s corporate counsel.

ARTICLE VII

DISTRIBUTIONS

7.1           Distributions. All distributions, if any of profits to Shareholders, will be determined by the Board of Directors and shall be proportionate with each Shareholders’s stock ownership.

ARTICLE VIII

GENERAL PROVlSIONS

8.1           Incorporation. The Recitals and all schedules and exhibits referred to and attached to this Agreement are true and correct and are hereby incorporated into and made a part of this Agreement.

8.2           Entire Agreement. This Agreement constitutes the final, complete and exclusive understanding of the Parties and the same may not be amended or modified except in writing signed by all Parties. This Agreement supersedes any and all other agreements, either oral or in writing, between the Parties with respect to the subject matter in this Agreement and contains all of the covenants, agreements, representations and other statements between the Parties with respect to such matter. Each Party to this Agreement acknowledges that no representations, inducements, promises or statements, oral or otherwise, have been made by any Party or anyyone acting on behalf of any Party which are not embodied in this Agreement.

 

  

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8.3          Construction of Agreement. In the event it is necessary to construe the terms and conditions of this Agreement, it will be done without giving any consideration or effect as to which Party may have drafted this Agreement. The Parties acknowledge that all the terms of this Agreement were negotiated at arms' length and that this Agreement and all documents executed in connection with this Agreement were prepared and  executed without duress, undue influence or coercion upon any Party.

8.4          Notice. All notices, demands, and other communications given or required to be given pursuant to this Agreement shall be in writing, or by written telecommunication, and shall be deemed to have been duly given upon the earlier of actual receipt or three (3) days following forwarding to the address as set forth below.

If to the Company:

Internal Fixation Systems, Inc.

10100 N.W.1 1 6 the Way \y

Medley, FI 33 178

If to Kenneth West:

140 1 Bay Road #403

Miami Beach, F1 33139

Phone: (305)776-6894

If to Matt Endara:

7125 S.W.81 Court

Miami, F1 33157

Phone: (305)251-0043

If to Christopher Endara:

18020 SI W.' 83d Avenue

Miami  F1  33157

Phone: (305)232-3747

If  to Dr. Jaime Carbonell:

13865 Farmer Road

Miami, FI  33158 .

Phone: (786)797-4953

  

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If to Stephen Dresnick:

 

5901 SW 74th Street  Suite 408

Miami, Fl 33143

Phone: (305) 632 4224

8.5           Governing Law; Venue; Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Florida (without giving effect to principles of conflicts of laws). The venue for any legal proceedings arising from or connected with this Agreement shall be exclusively in Miami-Dade County, Florida, and no Party shall have the right to challenge venue based upon foninz non conveniews or otherwise. The Parties expressly consent to the jurisdiction of the state and/or federal courts in and/or for Miami-Dade County, Florida.

8.6           Disputes. In the event of any disputes arising out of or in connection. with the terms and conditions of this Agreement the prevailing party shall be entitled to receive its costs including all legal fees through all arbitration, trial and appellate levels. Notwithstanding the foregoing, it is understood and agreed by the Shareholders that all disputes arising out of or in connection with this Agreement shall be submitted to arbitration for resolution. If the Shareholders are unable to agree on the selection of the arbitrator(s), then the President shall select one (I) arbitrator, and if the Shareholder initiating the proceeding is not the President, such member shall select one (1) other arbitrator, which selections shall take place no later than fifteen (15) days after a claim of arbitration is filed by any party with the American Arbitration Association, Miami Office (the "Filing Date") and the two (2) selected arbitrators shall mutually agree on the selection of a third arbitration within thirty (30) days after. the Filing Date. If the two (2) selected arbitrators fail to agree on the selection of a third arbitrator within such period of time, then the director or other appointed representative of .the American Arbitration Association, Miami' Office, shall select the third arbitrator. The ruling of a majority of the selected arbitrator@) (hereinafter collectively referred to as the "Arbitrator") shall prevail and be deemed conclusive in and as to any dispute arising out of or in connection with this Agreement. Any decision of the Arbitrator shall be final and binding upon the parties hereto and enforceable in any court of competent jurisdiction.

  

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AGREED AND ACCEPTED

THIS _______ DAY OF May 2009

Current IFS Shareholders:

 

 

	 	 
	Jaime Carbonell	 
	 	 
	 	 
	Stephen Dresnick	 
	 	 
	 	 
	Chris Endara	 
	 	 
	 	 
	Matt Endara	 
	 	 
	 	 
	Ken West	 
	 	 

 

  

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SCHEDULE  A

 

	Name 	Shares as %	 
	 	 	 
	Jaime Carbonell  	7%	 
	 	 	 
	Stephen Dresnick 	24%	 
	 	 	 
	Christopher Endara  	23%	 
	 	 	 
	Matt Endara	23%	 
	 	 	 
	Ken West	23%	 
	 	 	 
	 	 	 

 

 

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