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EXHIBIT 4.4
EXECUTION COPY
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STOCK RESTRICTION AGREEMENT
AGREEMENT, made as of the 20th day of September 1996, by and among
Balanced Care Corporation, a Delaware corporation (the "Company"), Xxxx X.
Xxxxxxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx XxXxxxxx and Xxxxxxx
DiGillio (each, a "Securityholder" and, collectively, the "Securityholders"),
and the persons listed as Purchasers in the signature pages hereto, or who
executes a counterpart signature page hereto on or after the date above
(collectively, the "Purchasers" and individually, a "Purchaser").
WHEREAS, the Securityholders are the holders of shares and/or options
for the purchase of shares totaling an aggregate of 2,279,200 shares of common
stock, $.001 par value, of the Company (the "Common Stock");
WHEREAS, the Purchasers are acquiring an aggregate of up to 4,921,750
shares of Series B Convertible Preferred Stock of the Company pursuant to the
terms of a Series B Convertible Preferred Stock Purchase Agreement dated the
date hereof between the Company and the Purchasers (the "Purchase Agreement")
pursuant to either a Closing or any Option Closing thereunder (as such terms
are defined in the Purchase Agreement); and
WHEREAS, it is a condition to the obligations of the Purchasers under
the Purchase Agreement that this Agreement be executed by the parties hereto,
and the parties are willing to execute this Agreement and to be bound by the
provisions hereof;
NOW, THEREFORE, in consideration of the foregoing, the agreements set
forth below, and the parties' desire to provide for continuity of ownership of
the Company to further the interests of the Company and its present and future
stockholders, the parties hereby agree with each other as follows:
1. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following respective meanings:
(a) "Stock" shall mean and include all shares of Common
Stock, and all other securities of the Company which may be issued in exchange
for or in respect of shares of Common Stock (whether by way of stock split,
stock dividend, combination, reclassification, reorganization, or any other
means).
(b) "Shares" shall mean and include all shares of Stock now
owned or hereafter acquired by either (i) a Securityholder or (ii) any
Purchaser.
2. Prohibited Transfers. (a) No Securityholder shall sell,
assign, transfer, pledge, hypothecate, mortgage, encumber or otherwise dispose
of all or any of his Shares except to the
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Company or as expressly provided in this Agreement. Notwithstanding the
foregoing, any Securityholder may transfer all or any of his Shares (i) by way
of gift to any member of his family or to any trust for the benefit of any such
family member or such Securityholder, provided that any such transferee shall
agree in writing with the Company and the Purchasers, as a condition to such
transfer, to be bound by all of the provisions of this Agreement to the same
extent as if such transferee were such Securityholder, or (ii) by will or the
laws of descent and distribution, in which event each such transferee shall be
bound by all of the provisions of this Agreement to the same extent as if such
transferee were the Securityholder. As used herein, the word "family" shall
include any spouse, lineal ancestor or descendant, brother or sister.
(b) In addition to the foregoing, if requested by the
underwriters for the initial underwritten public offering of securities of the
Company, each Securityholder shall agree not to sell, assign, transfer, pledge,
hypothecate, mortgage, encumber or otherwise dispose of all or any of his
Shares, without the written consent of such underwriters, for a period of not
more than 270 days following the effective date of the registration statement
relating to such offering. This Section 2(b) shall expressly survive a
termination of this Agreement pursuant to clause (a) of Section 7 hereof.
3. Right of First Refusal on Dispositions.
(a) If at any time a Securityholder desires to sell for cash
all or any part of his Shares pursuant to a bona fide offer from a third party
(the "Proposed Transferee"), the Securityholder shall submit a written offer
(the "Offer") to sell such Shares (the "Offered Shares") to the Purchasers on
terms and conditions, including price, not less favorable to the Purchasers
than those on which the Securityholder proposes to sell such Offered Shares to
the Proposed Transferee. The Offer shall disclose the identity of the Proposed
Transferee, the Offered Shares proposed to be sold, the total number of Shares
owned by the Securityholder, the terms and conditions, including price, of the
proposed sale, and any other material facts relating to the proposed sale. The
Offer shall further state that the Purchasers may acquire, in accordance with
the provisions of this Agreement, all or any portion of the Offered Shares for
the price and upon the other terms and conditions, including deferred payment
(if applicable), set forth therein.
(b) Each Purchaser shall have the absolute right to purchase
that number of Offered Shares as shall be equal to the number of Offered Shares
multiplied by a fraction, the numerator of which shall be the number of Shares
then owned by such Purchaser and the denominator of which shall be the
aggregate number of Shares then owned by all of the Purchasers. For purposes of
Sections 3, 4 and 12, all of the Stock which a Purchaser has the right to
acquire from the Company upon the conversion, exercise or exchange of any of
the securities of the Company then owned by such Purchaser shall be deemed to
be Shares then owned by such Purchaser. (The amount of Offered Shares that each
Purchaser is entitled to purchase under this Section 3(b) shall be referred to
as its "Pro Rata Fraction").
(c) The Purchasers shall have a right of oversubscription
such that if any Purchaser fails to accept the Offer as to its Pro Rata
Fraction, the other Purchasers shall, among them, have the right to purchase up
to the balance of the Offered Shares not so purchased. Such
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right of oversubscription may be exercised by a Purchaser by accepting the Offer
as to more than its ProRata Fraction. If, as a result thereof, such
oversubscriptions exceed the total number of Offered Shares available in respect
of such oversubscription privilege, the oversubscribing Purchasers shall be cut
back with respect to their oversubscriptions on a pro rata basis in accordance
with their respective Pro Rata Fractions or as they may otherwise agree among
themselves.
(d) If a Purchaser desires to purchase all or any part of the
Offered Shares, said Purchaser shall communicate in writing its election to
purchase to the Securityholder, which communication shall state the number of
Offered Shares said Purchaser desires to purchase and shall be given to the
Securityholder in accordance with Section 11 below within thirty days of the
date the Offer was made. Such communication shall, when taken in conjunction
with the Offer, be deemed to constitute a valid, legally binding and
enforceable agreement for the sale and purchase of such Offered Shares (subject
to the aforesaid limitations as to a Purchaser's right to purchase more than
its Pro Rata Fraction). Sales of the Offered Shares to be sold to purchasing
Purchasers pursuant to this Section 3 shall be made at the offices of the
Company on the 45th day following the date the Offer was made (or if such 45th
day is not a business day, then on the next succeeding business day). Such
sales shall be effected by the Securityholder's delivery to each purchasing
Purchaser of a certificate or certificates evidencing the Offered Shares to be
purchased by it, duly endorsed for transfer to such purchasing Purchaser,
against payment to the Securityholder of the purchase price therefor by such
purchasing Purchaser.
(e) If the Purchasers do not purchase all of the Offered
Shares, the Offered Shares not so purchased may be sold by the Securityholder
at any time within 90 days after the date the Offer was made, subject to the
provisions of Sections 4, 5 and 6. Any such sale shall be to the Proposed
Transferee, at not less than the price and upon other terms and conditions, if
any, not more favorable to the Proposed Transferee than those specified in the
Offer. Any Offered Shares not sold within such 90-day period shall continue to
be subject to the requirements of a prior offer pursuant to this Section 3. If
Offered Shares are sold pursuant to this Section 3 to any purchaser who is not
a party to this Agreement, the Offered Shares so sold shall no longer be
subject to this Agreement.
(f) The Purchasers' right of first refusal provided in this
Section 3 shall not apply with respect to sales of Shares to the Company or
transfers permitted pursuant to Section 2(a)(i) or (ii).
4. Right of Participation in Sales.
(a) If at any time the Securityholder desires to sell for
cash all or any part of the Shares owned by him to any person or entity other
than one or more of the Purchasers (the "Buyer"), each of the Purchasers shall
have the right to sell to the Buyer, as a condition to such sale by the
Securityholder, at the same price per share and on the same terms and
conditions as involved in such sale by the Securityholder, the same percentage
of the Shares owned by such Purchaser as the Shares to be sold by the
Securityholder to the Buyer represents with respect to
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the Shares owned by the Securityholder immediately prior to the sale of any of
his Shares to the Buyer.
(b) Each Purchaser wishing to so participate in any sale
under this Section 4 shall notify the Securityholder in writing of such
intention as soon as practicable after such Purchaser's receipt of the Offer
made pursuant to Section 3, and in any event within twenty days after the date
the Offer was made. Such notification shall be given to such Securityholder in
accordance with Section 11 below.
(c) The Securityholder and each participating Purchaser shall
sell to the Buyer all, or at the option of the Buyer, any part of the Shares
proposed to be sold by them at not less than the price and upon other teens and
conditions, if any, not more favorable to the Buyer than those in the Offer
provided by the Securityholder under Section 3 above; provided, however, that
any purchase of less than all of such Shares by the Buyer shall be made from
the Securityholder and each participating Purchaser pro rata based upon the
relative amount of the Shares that the Securityholder and each participating
Purchaser is otherwise entitled to sell pursuant to Section 4(a).
(d) Any Shares sold by the Securityholder or a participating
Purchaser pursuant to this Section 4 shall no longer be subject to this
Agreement.
(e) The Purchasers' right to participate in sales pursuant to
this Section 4 shall not apply with respect to sales of Shares to the Company
or transfers permitted pursuant to Section 2(a)(i) or (ii).
5. Further Limitation as to Transfers by Securityholders. In
addition to the other restrictions provided in this Agreement, each
Securityholder who holds shares of Common Stock on the date hereof agrees that
until the earlier to occur of the third anniversary of the date of this
Agreement or the date on which he is no longer employed in any capacity by the
Company or any of its subsidiaries, the aggregate number of Shares which he may
transfer pursuant to Sections 3 and 4 shall not exceed 30% of the Shares owned
by him on the date hereof (subject to equitable adjustment for any stock split,
stock dividend, combination of shares or the like and based upon Common Stock or
Common Stock equivalents).
6. [RESERVED]
7. Term. This Agreement shall terminate (a) immediately prior to
the consummation of the first firm commitment underwritten public offering
pursuant to an effective registration statement on Form S-1 (or its then
equivalent) under the Securities Act of 1933, as amended, pursuant to which the
aggregate net proceeds to the Company from the sale of Stock is at least
$30,500,000 at an offering price to the public of at least $8.00 per share
(which price shall be adjusted appropriately in the event of a stock split,
stock dividend, or other recapitalization of the Company's capital stock) or (b)
on the tenth anniversary of the date of this Agreement, whichever occurs first.
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8. Failure to Deliver Shares. If a Securityholder becomes
obligated to sell any Shares to a Purchaser or the Company under this Agreement
and fails to deliver such Shares in accordance with the terms of this Agreement,
such Purchaser or the Company, as the case may be, may, at its option, in
addition to all other remedies it may have, send to such Securityholder the
purchase price for such Shares as is herein specified. Thereupon, the Company
upon written notice to such Securityholder, (a) shall cancel on its books the
certificate or certificates representing the Shares to be sold and (b) shall
issue, in lieu thereof, in the name of such Purchaser or the Company, as the
case may be, a new certificate or certificates representing such Shares, and
thereupon all of such Securityholder's rights in and to such Shares shall
terminate.
9. Specific Enforcement. Each Securityholder expressly agrees
that the Purchasers and the Company will be irreparably damaged if this
Agreement is not specifically enforced. Upon a breach or threatened breach of
the terms, covenants and/or conditions of this Agreement by a Securityholder,
the Purchasers and the Company shall, in addition to all other remedies, each be
entitled to a temporary or permanent injunction, without showing any actual
damage, and/or a decree for specific performance, in accordance with the
provisions hereof.
10. Legend. Each certificate evidencing any of the Shares shall
bear a legend substantially as follows:
"The shares represented by this certificate are subject to
restrictions on transfer and may not be sold, exchanged, transferred,
pledged, hypothecated or otherwise disposed of except in accordance
with and subject to all the terms and conditions of a certain Stock
Restriction Agreement dated as of September 20, 1996, a copy of which
the Company will furnish to the holder of this certificate upon
request and without charge."
11. Notices. Notices given hereunder shall be deemed to have been
duly given on the date of personal delivery, on the date of postmark if mailed
by certified or registered mail, return receipt requested, or on the date sent
by telecopier or telex to the party being notified at his or its address
specified on the applicable signature page hereto or, in the case of the
Purchasers, its address as set forth on Schedule 1.1 to the Purchase Agreement,
or such other address as the addressee may subsequently notify the other parties
of in writing.
12. Entire Agreement and Amendments. This Agreement constitutes
the entire agreement of the parties with respect to the subject matter hereof
and neither this Agreement nor any provision hereof may be waived, modified,
amended or terminated except by a written agreement signed by the parties
hereto; provided, however, that Purchasers owning a majority of the Shares owned
by all Purchasers may effect any such waiver, modification, amendment or
termination on behalf of all of the Purchasers. To the extent any term or other
provision of any other indenture, agreement or instrument by which any party
hereto is bound conflicts with this Agreement, this Agreement shall have
precedence over such conflicting term or provision.
13. Governing Law; Successors and Assigns. This Agreement shall
be governed by the laws of Delaware and shall be binding upon the heirs,
personal representatives, executors, administrators, successors and assigns of
the parties.
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14. Waivers. No waiver of any breach or default hereunder shall
be considered valid unless in writing, and no such waiver shall be deemed a
waiver of any subsequent breach or default of the same or similar nature.
15. Severability. If any provision of this Agreement shall be held
to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
16. Captions. Captions are for convenience only and are not deemed
to be part of this Agreement.
17. Continuation of Employment. Nothing in this Agreement shall
create an obligation on the Company or the Purchasers to continue any
Securityholder's employment with the Company.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Signature page follows immediately.]
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IN WITNESS WHEREOF, this Stock Restriction Agreement has been executed
as of the date and year first above Written.
COMPANY:
BALANCED CARE CORPORATION
By: /s/ Xxxxxxx X. XxXxxxxx
-----------------------------
Title: Vice President
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Address: 0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxxx, XX 00000
INVESTORS:
OMEGA VENTURES II, L.P.
By: Omega Ventures II Management, L.L.C.
Its General Partner
By: /s/ Xxxxxxx X. Xxxxx
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Authorized Signatory
OMEGA VENTURES II CAYMAN, L.P.
By: Omega Ventures II Management, L.L.C.
Its Administrative General Partner
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Authorized Signatory
CROSSOVER FUND II, L.P.
By: Crossover Investment Management, L.L.C.
Its General Partner
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Authorized Signatory
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CROSSOVER FUND IIA, L.P.
By: Crossover Investment Management, L.L.C.
Its General Partner
By: /s/ Xxxxxxx X. Xxxxx
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Authorized Signatory
BAYVIEW INVESTORS, LTD.
By: Xxxxxxxxx, Xxxxxxxx & Company
Private Equity Group, L.L.C.
Its General Partner
By: /s/ Xxxxxxx X. Xxxxx
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Authorized Signatory
XXXXX X. XXXXXXXXX AND XXXXX X.
XXXXXXXXX, TRUSTEES, XXXXXXXXX
FAMILY TRUST 3/29/85
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------------
XXXXX X. XXXXXXXXX, Trustee
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------------
XXXXX X. XXXXXXXXX, Trustee
BOSTON SAFE DEPOSIT AND TRUST
COMPANY AS TRUSTEE FOR U S WEST
PENSION TRUST
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Trust Officer
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BOSTON SAFE DEPOSIT AND TRUST
COMPANY AS TRUSTEE FOR U S WEST
BENEFIT ASSURANCE TRUST
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: Trust Officer
JULIET CHALLENGER, INC.
By: /s/ Xxxxxxx Xxxxxx
------------------------------
Name: Xxxxxxx Xxxxxx
Title:
XXXXX X. XXXXXXX, XXXXX XXXXXXXX
XXXXXXX AND X.X. XXXXXXXXXXXX,
TRUSTEES OF THE XXXXX X. XXXXXXX
TRUST U/A DATED NOVEMBER 18, 1985
By: /s/ X.X. Xxxxxxxxxxxx
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Trustee:
XXXXXX X. XXXXXX AND
X.X. XXXXXXXXXXXX, TRUSTEES UNDER
AGREEMENT OF TRUST DATED 12/30/76 FOR
THE CHILDREN OF JULIET XXX XXXXXXX
XXXXXXX
By: /s/ X.X. Xxxxxx
------------------------------
Trustee:
By: /s/ X.X. Xxxxxxxxxxxx
------------------------------
Trustee:
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XXXXXX X. XXXXXX AND
X.X. XXXXXXXXXXXX, TRUSTEES UNDER
AGREEMENT OF TRUST DATED 12/30/76 FOR
THE CHILDREN OF XXXXXX XXXXXXX
XXXXXX
By: /s/ X. X. Xxxxxx
______________________________
Trustee:
By: /s/ X. X. Xxxxxxxxxxxx
______________________________
Trustee:
XXXXXX X. XXXXXX AND
X.X. XXXXXXXXXXXX, TRUSTEES UNDER
AGREEMENT OF TRUST DATED 12/30/76 FOR
THE CHILDREN OF XXXXXXX XXXXXXX
XXXXXXX
By: /s/ X. X. Xxxxxx
_____________________________
Trustee:
By: /s/ X. X. Xxxxxxxxxxxx
______________________________
Trustee:
XXXXXX X. XXXXXX AND
X.X. XXXXXXXXXXXX, TRUSTEES UNDER
AGREEMENT OF TRUST DATED 12/30/76 FOR
THE CHILDREN OF XXXXX X. XXXXXXX, XX.
By: /s/ X. X. Xxxxxx
______________________________
Trustee:
By: /s/ X. X. Xxxxxxxxxxxx
______________________________
Trustee:
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XXX XXX XX, X.X.
By: /s/ Xxxxxx X. Xxxxxxx
______________________________
Name: Xxxxxx X. Xxxxxxx
Title: Managing General Partner
HCO Partners III, L.P.
By: /s/ F. Xxxxx Xxxx
______________________________
F. Xxxxx Xxxx
Managing Director
SECURITYHOLDERS:
/s/ Xxxx X. Xxxxxxxxx
_________________________________
Xxxx X. Xxxxxxxxx
Address:_________________________
_________________________
_________________________
/s/ Xxxxxx Xxxxxx
_________________________________
Xxxxxx Xxxxxx
Address:_________________________
_________________________
_________________________
/s/ Xxxxx Xxxxx
_________________________________
Xxxxx Xxxxx
Address:_________________________
_________________________
_________________________
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/s/ Xxxx Xxxxx
_________________________________
Xxxx Xxxxx
Address: 000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxxxxx, XX 00000
/s/ Xxxxxxx XxXxxxxx
_________________________________
Willliam XxXxxxxx
Address: 000 Xxxx Xx.
Xxxxxxxx, XX 00000
/s/ Xxxxxxx XxXxxxx
_________________________________
Xxxxxxx XxXxxxx
Address: 000 Xxxxxxxxx Xx.
Xxxxxxxxxx, XX 00000
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Counterpart Signature Page to that certain Stock Restriction Agreement
dated as of September 20, 1996 by and among Balanced Care Corporation, the
Securityholders (as defined therein) and the Purchasers (as defined therein).
**
MEDITRUST MORTGAGE INVESTMENTS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name:
Title: Xxxxxxx X. Xxxxxxxx, Esq.
Senior Vice President
**The Declaration of Trust establishing Meditrust, the sole
shareholder of Meditrust Mortgage Investments, Inc. dated August 6, 1985, as
amended (the "Declaration of Trust"), a copy of which, together with all
amendments thereto, is duly filed in the office of the Secretary of State of
the Commonwealth of Massachusetts, provides that the name "Meditrust" refers to
the Trustees under the Declaration of Trust collectively as Trustees, but not
individually or personally; and that no trustee, officer, shareholder, employee
or agent of Meditrust or any of its subsidiaries shall be held to any personal
liability, jointly or severally, for any obligation of, or claims against
Meditrust or any of its subsidiaries. All persons dealing with Meditrust or any
of its subsidiaries, including without limitation Meditrust Mortgage
Investments, Inc., in any way, shall look only to the respective assets of
Meditrust or any of its subsidiaries, including without limitation Meditrust
Mortgage Investments, Inc., for the payment of any sum or the performance of
any obligations. All parties hereto specifically acknowledge and agree that
Meditrust is neither a party to this agreement nor shall Meditrust assume or
have any liability hereunder of any kind or nature whatsoever.
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