EXHIBIT 2
STOCKHOLDERS AGREEMENT
AGREEMENT made as of the 30th day of October, 1996, by and among
Lexington Healthcare Group, Inc. a Delaware corporation with a business
address of 00 Xxxx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxxx 00000 (the
"Corporation"), Xxxx Xxxxxxxx, an individual residing at 0000 Xxxxxx Xxxx
Xxxx, Xxxxxxxxx, XX 00000 ("Xxxxxxxx"), and Xxxxx Xxxxxx, an individual
residing at 000 Xxxx Xxxx Xxxx, Xxx Xxxxxxxx, XX 00000 ("Xxxxxx").
Xxxxxxxx and Xxxxxx are sometimes hereinafter referred to collectively as
"Stockholders" and individually as Stockholder.
RECITALS
WHEREAS, the authorized capital stock of the Corporation consists of
16,000,000 shares of common stock, par value $______ per share (the "Common
Stock"); and
WHEREAS, Xxxxxxxx owns 1,846,500 shares of Common Stock and Xxxxxx
owns 615,500 shares of Common Stock (collectively referred to as the
"Shares");
WHEREAS, the Stockholders desire to promote their joint interests and
the interests of the Corporation by imposing certain restrictions and
obligations on themselves and on the Corporation and on the Shares held by
each of them;
WHEREAS, the Stockholders believe it to be in their best interests and
in the best interests of the Corporation that the Shares owned by the
Stockholders be transferrable only upon compliance with the provisions of
this Agreement; and
WHEREAS, the Stockholders and the Corporation anticipate that the
Corporation will soon be consummating an initial public offering of its
securities;
NOW, THEREFORE, in consideration of the mutual obligations contained
herein and other good and valuable consideration, the Stockholders hereby
agree as follows:
1. Definitions.
(a). The word "Affiliate" shall mean any Person controlling, or
controlled by, another Person and for purposes hereof shall include all
relatives by blood, marriage or adoption.
(b). The word "Agreement" shall mean this Stockholders Agreement, as
it may be amended from time to time pursuant to the terms hereof.
(c). The term "Bona Fide Offer" shall mean any offer made by a Person
not a party to this Agreement or an Affiliate thereof to any Stockholder to
purchase Shares; provided, however, that said offer must include an
agreement by the Transferee to purchase Shares owned by the non-selling
Stockholder to the extent the "come along" provisions of Section 3 hereof
are exercised by such non-selling Stockholder. In the event a Bona Fide
Offer shall provide for the exchange of assets other than cash or cash
equivalents, either the Bona Fide Offer shall include the fair market value
of said assets if such fair market value is publicly available and readily
ascertainable or the Transferor shall submit with the Offer to Sell
relating to such Bona Fide Offer an appraisal prepared by a qualified
independent third party evidencing the fair market value of the assets to
be exchanged as of the date of the Bona Fide Offer.
(d). The word "Person" shall mean (and include) an individual, trust,
fiduciary, partnership, corporation, association or any other legal entity.
(e). The term "Offer to Sell" shall refer to an offer made pursuant
to, and as defined in, Section 2(b).
(f). The term "Offered Shares" shall mean the shares of Common Stock
of the Corporation included in an Offer to Sell.
(g). The term "owned by," referring to the owner of Shares, shall
refer to the Person recorded on the stock record books regularly maintained
by the Corporation as the owner of such Shares.
(h). The word "transfer" shall include the sale, assignment, gift,
devise, pledge, encumbrance or other disposition of any Shares, whether
absolute or conditional, temporary or permanent, outright or in trust,
voluntary or involuntary.
(i). The word "Transferee" shall refer to any holder of Shares
transferred to him by a Stockholder.
(j). The words "Transferor" or "Selling Stockholder" shall refer to
any Stockholder desiring to make a transfer of his Shares.
2. Restrictions on Transferability of Shares Held by the
Stockholders and Permitted Transfers.
(a). Each of the Stockholders hereby agrees not to transfer, sell,
distribute or otherwise dispose of the Shares, now owned or hereafter
acquired. Notwithstanding the foregoing, either Stockholder may: (i) sell
all or any part of his Shares publicly in a public offering or ordinary
brokerage transactions in accordance with Rule 144 promulgated pursuant to
the Securities Act of 1933, as amended ("Act"); (ii) transfer all or any
part of his Shares, without consideration, to a spouse, lineal descendent,
parent or to a trust for the benefit of the Stockholder and/or any of the
foregoing ("Family Members") subject to compliance with the provisions of
Section 5 hereof; (iii) make a private sale of any Shares owned by him only
pursuant to a Bona Fide Offer and after compliance with the terms and
conditions of Section 2 of this Agreement; or (iv) transfer his Shares upon
his death subject to the provisions of Section 4 hereof. Any purported
transfer of any Shares by any Stockholder or any successor to any
Stockholder which violates any provision of this Agreement will be invalid,
and the Corporation will not transfer any of such Shares on its books, nor
will any of such Shares be entitled to vote or receive dividends thereon,
during the period of any such violation. Such disqualification will be in
addition to, and not in substitution of; any other legal or equitable
remedies to enforce such provisions. The Corporation and its officers,
directors and employees shall not be liable to any person for any action or
refusal to act taken under the provisions of this Section 2(a).
(b). (i) If either Stockholder desires to transfer his or her Shares
(a "Selling Stockholder"), in a private sale in connection with a Bona Fide
Offer, the Selling Stockholder must give the remaining Stockholder thirty
(30) days written notice of his intention to sell ("Offer to Sell") at the
address as set forth on the books of the Corporation. An Offer to Sell
shall be in writing and shall include the number of Shares which the
Transferor intends to transfer, the name and address of the prospective
Transferee, the terms of such transfer and a copy of any written agreement
or other document setting forth the information herein required. A copy of
the Bona Fide Offer shall be delivered with the written Offer to Sell. The
Offer to Sell shall constitute an offer to sell the Offered Shares to the
other Stockholder at the price and upon the terms and conditions as are set
forth in the Bona Fide Offer. If the Bona Fide Offer provides for the exchange
of assets other than cash or cash equivalents, the Offer to Sell to the
Stockholder shall be deemed to be an Offer to Sell the Offered Shares at the
fair market value of the assets to be exchanged, determined as of the date of
the Bona Fide Offer.
(ii) The remaining Stockholder will thereupon have the option, to
be exercised in writing, within thirty (30) days from the giving of the
Offer to Sell ("Exercise Period") to purchase all or any portion of the
Offered Shares. The Selling Stockholder shall not be obligated to sell any
of the Offered Shares to the non-selling Stockholder unless all of the
Offered Shares are purchased by the non-selling Stockholder.
(c). If an Offer to Sell is not accepted by the other Stockholder, the
Transferor may transfer the Shares to the prospective Transferee named in
the Offer to Sell in strict accordance with the terms therein stated, at a
price not less than, and on terms and conditions not more favorable to such
Transferee than, are set forth in the Offer to Sell, free and clear of the
terms and conditions of this Agreement. A transfer to a Transferee after an
Offer to Sell is not accepted shall be consummated and the Shares
transferred to the Transferee within thirty (30) days after the expiration
of the Exercise Period. If the Transferor shall fail to make such transfer
within such thirty (30) day period, or if he shall propose to sell the
Offered Shares at a lower price or on more favorable terms to the
purchaser, the Offered Shares shall again become subject to all the
restrictions contained in this Agreement, and the Selling Stockholder shall
again make the Offered Shares available to the remaining Stockholder for
purchase in the manner set forth herein.
3. Come Along. In the event the non-selling Stockholder determines
not to exercise the right of first refusal granted pursuant to Section 2,
the non-selling Stockholder shall have the right to cause the Transferee to
purchase from the non-selling Stockholder the same percentage of the Shares
owned by the non-selling Stockholder as is equal to the fraction, expressed as a
percentage, the numerator of which is the number of Offered Shares and the
denominator of which is the total number of Shares owned by the Selling
Stockholder prior to such sale; subject to the adjustment specified in this
Section 3 ("Come Along"). The non-selling Stockholder shall exercise the Come
Along by giving the Selling Stockholder and the proposed Transferee notice of
such exercise within the Exercise Period, but not later than the date upon which
the non-selling Stockholder gives notice of his non-exercise of the right of
first refusal if notice of non-exercise is given. Upon receipt of the notice of
exercise of the Come Along, the Transferee shall have the option to purchase the
aggregate number of Shares specified in the Bona Fide Offer to be purchased from
the Selling Stockholder and the other Stockholder, pro rata or to increase the
number of Shares purchased by such amount (with a concomitant increase in the
purchase price, but otherwise on the same terms and conditions contained in the
Bona Fide Offer) so that the other Stockholder is selling the same percentage of
his Shares as the percentage sold by the Selling Stockholder. The Transferee's
election shall be made within fifteen days of the receipt by the Transferee of
the other Stockholder's exercise of the Come Along.
4. Death of a Stockholder. The transfer of Shares upon the death of
a Stockholder to such Stockholder's estate and from the estate to the
beneficiary of such estate or to the distributee under law, shall be
permitted, provided however, the Shares so transferred shall remain subject
to the terms and conditions of this Agreement and such Shares shall be
voted as provided in Section 5 hereof as if; and to the same extent, that
the transfer were a transfer to a Family Member.
5. Transfer To Family Members. A transfer, without consideration,
may be made to a Family Member, as provided in Section 2, provided that the
Family Member to whom such transfer is made agrees in writing for the
benefit of the Stockholder other than the Transferor that such Family
Member will vote the Shares owned by him/her/it on all matters upon which
the Shares of the Corporation are voted in the same proportion as the
Shares owned by Xxxxxxxx and Xxxxxx are voted. If either Xxxxxxxx or
Xxxxxx own no Shares, the Shares owned by the Family Member shall be voted
in the same manner as the Shares owned by the Stockholder owning Shares are
voted. As used in this Section, the term "voted" shall include action
taken by written consent, in addition to a vote in person or by proxy.
6. Rights to Serve as or Designate Directors. For as long as either
Xxxxxxxx or Xxxxxx remains a Stockholder of the Corporation, each agrees to
vote the Shares owned by him for the election of the other as a Director of
the Corporation or for the person designated a Director in his stead. To
the extent not inconsistent with law, each will take all action reasonably
necessary (including to vote as a director for a management slate of
directors which includes the other Stockholder or such other Stockholder's
designee) to carry out the intention that each of the Stockholders (or
their respective designee) be elected as a director of the Corporation.
7. Endorsement on Certificates. Upon execution of this Agreement,
the certificates of stock subject thereto shall be surrendered to the
Corporation and the stock certificates representing the Shares shall bear
the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
under state securities laws and may not be sold or
transferred unless registered under said act and applicable
state securities laws or unless, in the opinion of counsel
satisfactory to the Corporation, the transfer qualifies for
an exemption from the registration provisions thereof. In
addition, this certificate of stock and the shares
represented hereby are held subject to the terms and
conditions contained in an agreement by and among the
Stockholders of the Corporation and the Corporation dated as
of , 1996, and all amendments thereto, and
may not be transferred except in accordance with the terms
and provisions thereof. A copy of such agreement will be
furnished by the Corporation upon request."
Upon endorsement, the certificates shall be delivered to the
Stockholders, who shall be entitled to exercise all rights of ownership of
such stock, subject to the terms of this Agreement. All capital stock of
the Corporation hereinafter issued to the Stockholders shall bear the same
endorsement.
8. Termination of Agreement. This Agreement shall terminate upon the
occurrence of any of the following events;
(a). The cessation of the Corporation's business;
(b). Adjudication of the Corporation as a bankrupt, the execution by
it of an assignment for the benefit of creditors, or the appointment of a
receiver for the Corporation;
(c). Voluntary, involuntary or judicial dissolution of the
Corporation; or
(d). Only Xxxxxxxx or Xxxxxx owns Shares and no Shares are owned by a
Family Member or a deemed Family Member.
Upon the termination of this Agreement, each Stockholder shall
surrender to the Corporation the certificates for his shares, and the
Corporation shall issue to him in lieu thereof new certificates for an
equal number of shares without the endorsement set forth in Section 7.
9. Equitable Remedy. The parties hereby declare that it is
impossible to measure in monetary terms the damages which shall accrue to a
party hereto by reason of another party's failure to perform any of the
obligations under this Agreement. Therefore, if any party hereto shall
institute any action or proceeding to enforce the provisions hereof; any
person (including the Corporation) against whom such action or proceeding
is brought hereby waives the claim or defense therein that there is an
adequate remedy at law, and such person shall not urge in any such action
or proceeding the claim or defense that such remedy at law exists.
10. Miscellaneous.
(a). Any notice or other communication required or permitted to be
given to any party hereunder shall be deemed given when delivered
personally or by overnight courier or other delivery service providing
documentary evidence of delivery, or five (5) days after mailing by
certified mail, return receipt requested, to the parties at the addresses
as set forth above, or to such other address as the respective parties may
designate by notice given pursuant to this Agreement.
(b). This Agreement shall be binding upon the parties hereto and their
heirs, executors, administrators, successors and assigns. Each Stockholder
in furtherance thereof shall execute a will directing his executor to
perform this Agreement and to execute all documents necessary to effectuate
its purposes, but the failure to execute such will shall not affect the
rights of any Stockholders or the obligations of any estate, as provided in
this Agreement.
(c). This Agreement contains the entire agreement of the parties and
supersedes all prior agreements, written or oral. No change in or
modification of this Agreement shall be binding unless the same shall be in
writing and signed by the parties hereto.
(d). This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut.
(e). Any controversy or claim arising out of or relating to this
contract shall be determined by arbitration in accordance with the
International Arbitration Rules of the American Arbitration Association.
The place of arbitration shall be New York City.
(f). Whenever from the context it appears appropriate, each item
stated in either the singular or the plural shall include the singular and
the plural, and pronouns stated in either the masculine, feminine or neuter
genders shall include the masculine, feminine and neuter genders.
(g). This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which together constitute
one and the same instrument.
11. Severability. It is agreed that in the event any provision of
this Agreement or the application thereof to any person or circumstance
shall be adjudged to be invalid or unenforceable according to any
applicable laws, the remaining provisions of this Agreement and the
application thereof to any person or circumstances shall not be affected
thereby and shall be enforced to the fullest extent permitted by law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
LEXINGTON HEALTHCARE GROUP, INC.
/s/ Xxxxx Xxxxxx President
By:
Title:
/s/ Xxxx Xxxxxxxx
Xxxx Xxxxxxxx
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
