STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT (the "Agreement"), dated as of November 4, 1997 by
and among (i) each of the stockholders listed on the signature pages attached
hereto (together with each other Person (defined below) who becomes a party to
this Agreement in accordance with the terms hereof, the "Stockholders"), and
(ii) Paragon Health Network, Inc., a Delaware corporation and the successor to
Living Centers of America, Inc. (the "Company").
W I T N E S S E T H:
WHEREAS, the transactions contemplated by this Agreement shall become
effective (the "Effective Date") on the date of, and simultaneously with, the
closing under the Amended and Restated Agreement and Plan of Merger, dated as
of September 17, 1997 among the Company, Apollo Management, L.P., on behalf of
one or more managed investment funds, and Apollo LCA Acquisition Corp. (the
"Merger Agreement");
WHEREAS, on the Effective Date, after giving effect to the transactions
contemplated by the Merger Agreement, each Stockholder shall beneficially own
the number of shares of common stock of the Company, par value $.01 per share
("Common Stock") set forth under its name on the signature pages attached
hereto, and the Stockholders shall collectively beneficially own 5,925,926
shares of Common Stock (collectively, the "Shares"); and
WHEREAS, the parties hereto desire to provide for certain rights and
obligations in respect to the Shares and the Company as hereinafter provided.
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I.
Definitions
Section 1.1 Definitions. Capitalized terms used herein and not otherwise
defined herein have the meaning ascribed to them in the Merger Agreement. In
addition, the following terms shall have the meaning ascribed to them below:
"Affiliate" of a Person shall have the meaning set forth in Rule 12b-2 of
the Exchange Act as in effect on the date of this Agreement, but shall not
include (i) any investment fund in which a Person has invested if the
Person does not otherwise control the investment fund or have, directly or
indirectly, voting or dispositive power over any securities owned by such
fund, (ii) any investor or limited partner of any Person who does not
otherwise have voting or dispositive power over securities owned by that
Person and not controlled by that Person, (iii) in the case of Chase Equity
Associates, L.P., any Person other than (A) Chase Capital Partners, its
sole general partner, and (B) the other investment partnerships or other
entities of which Chase Capital Partners is a general or managing partner
or member; (iv) in the case of Healthcare Equity Partners, L.P. or
Healthcare Equity QP Partners, any Person other than (A) Beecken, Xxxxx &
Company, L.L.C., the sole general partner of each of them, and (B) the
other investment partnerships of which Beecken, Xxxxx & Company, L.L.C. is
a general or managing partner or member or (v) in the case of Key Capital
Corporation or Key Equity Partners 97, any Person other than (A) any
general partner of Key Equity Partners 97 and (B) any of the investment
partnerships of which any general partner of Key Equity Partners is a
general or managing partner or member. It is expressly intended that any
Person who now or hereafter controls, directly or indirectly, any
Stockholder shall be subject to the terms of this Agreement as if it were a
Stockholder.
"Apollo" means collectively Apollo Management, L.P., its legal successors
and assigns, and each Person who controls, or is controlled by, Apollo
Management, L.P. including, without limitation, the Stockholders indicated
as such on the Apollo signature page attached hereto.
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"Associate" shall mean an officer, director, partner (other than a
limited partner) or executive employee of, or exclusive consultant to, any
Person, but shall not include in the case of Apollo, Xxxxx X. Xxxxx.
"Beneficial ownership" by a Person of any Voting Securities shall be
determined in accordance with the terms "beneficial ownership" as defined
in Rule 13d-3 under the Exchange Act as in effect on the date of this
Agreement, and in addition, "beneficial ownership" shall include securities
which such Person has the right to acquire (irrespective of whether such
right is exercisable immediately or only after the passage of time,
including the passage of time in excess of sixty (60) days), or exclusive
right to vote, pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights, warrants or
options, or otherwise. For purposes of this Agreement, a Stockholder shall
be deemed to beneficially own any Voting Securities beneficially owned by
its Affiliates, Associates or any Group of which such Stockholder or any
such Affiliate or Associate is a member.
"Board of Directors" shall mean the Board of Directors of the Company.
"Charter Documents" shall mean the Certificate of Incorporation and
Bylaws of the Company.
"Commission" shall mean the Securities and Exchange Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Group" shall mean a "group" as such term is used in Section 13(d)(3) of
the Exchange Act as in effect on the date of this Agreement.
"Laws" shall mean all applicable foreign, federal, state and local laws,
statutes, rules, regulations, codes and ordinances.
"Other Stockholders" shall mean the Stockholders other than Apollo.
"Person" shall mean any individual, Group, corporation, general or
limited partnership, limited liability company, governmental entity, joint
venture, estate, trust, association, organization or other entity of any
kind or nature.
"Recapitalization Merger" shall mean the merger of Apollo LCA Acquisition
Corp. with and into Living Centers of America, Inc. (the predecessor of the
Company).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stockholder Designee" shall mean a person designated for election to the
Board of Directors by Apollo as provided in Section 4.1.
"Voting Securities" shall mean (x) any securities entitled, or which may
be entitled, to vote generally in the election of directors of the Company,
(y) any securities convertible or exercisable into or exchangeable for such
securities (whether or not the right to convert, exercise or exchange is
subject to the passage of time or contingencies or both), or (z) any direct
or indirect rights or options to acquire any such securities; provided that
unexercised options granted pursuant to any employment benefit or similar
plan and rights issued pursuant to any shareholder rights plan shall be
deemed not to be "Voting Securities" (or to have Voting Power).
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In addition, the following terms have the definitions specified in the
Sections noted:
TERM SECTION
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Agreement recitals
Allocation Percentage 6.2
Apollo Directors 4.1(a)
Beneficial Ownership Threshold 4.1(a)
Common Stock recitals
Company recitals
Co-Sale 6.2
Drag Transaction 6.3(a)
Drag Transaction Closing Date 6.2(a)
Exempted Transfer 6.1
Merger Agreement recitals
Nominating Committee 4.1(d)
Notices 6.4
Proxy Statement 4.2
Purchaser 6.3(a)
Related Price 6.3(a)
Related Person 6.3(a)
Regulated Holder 6.4
Regulated Problem 6.4
Sale Notice 6.3(a)
Shares recitals
Standstill Period 5.1
Stockholders recitals
Stockholder Designee Period 4.1(a)
Third Party Sale 6.2
Third Party Sale Notice 6.1
Total Shares Outstanding 4.1(a)
Unaffiliated Directors 4.1(b)
Unauthorized Transfer 6.2
ARTICLE II.
Representations and Warranties of the Company
The Company hereby represents and warrants to each of the Stockholders as
follows:
Section 2.1 Authority for this Agreement. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of the Company and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or to consummate
the transactions so contemplated. This Agreement has been duly and validly
executed and delivered by the Company and, assuming this Agreement constitutes
a valid and binding obligation of the Stockholders, constitutes a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and to general principles of equity (whether considered in a
proceeding in equity or at law).
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Section 2.2 Consents and Approvals; No Violation. Except as set forth on
Schedule 2.2, neither the execution and delivery of this Agreement by the
Company nor the consummation of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
Restated Certificate of Incorporation or Bylaws (or other similar governing
documents) of the Company or any of its subsidiaries, (ii) require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental or regulatory authority, except where the failure to
obtain such consent, approval, authorization or permit, or to make such filing
or notification, would not in the aggregate have a Material Adverse Effect or
have a material adverse effect on the ability of the Company to consummate the
transactions contemplated hereby, (iii) result in a default (or give rise to
any right of termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, license, agreement or other
instrument or obligation to which the Company is a party or by which the
Company or any of its assets or subsidiaries may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) which would
not in the aggregate have a Material Adverse Effect or have a material adverse
effect on the ability of the Company to consummate the transactions
contemplated hereby, (iv) result in the creation or imposition of any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind
on any asset of the Company or any of its subsidiaries which, in the
aggregate, would have a Material Adverse Effect or have a material adverse
effect on the ability of the Company to consummate the transactions
contemplated hereby, or (v) violate any order, writ, injunction, agreement,
contract, decree, statute, rule or regulation applicable to the Company, any
of its subsidiaries or by which any of their respective assets are bound,
except for violations which would not in the aggregate have a Material Adverse
Effect or have a material adverse effect on the ability of the Company to
consummate the transactions contemplated by this Agreement.
Section 2.3 No Inconsistent Agreements. As of the Effective Date, there is
no (and from and after the Effective Date the Company will not, and will cause
its subsidiaries not to enter into any) agreement with respect to any
securities of the Company or any of its subsidiaries (and from and after the
Effective Date the Company shall not take, or permit any of its subsidiaries
to take, any action) that is inconsistent in any material respect with the
rights granted to the Stockholders in this Agreement.
Without limiting the foregoing, except for this Agreement and the
Registration Rights Agreement, there are no other existing agreements relating
to the voting or, except as set forth on schedule 2.3, registration of any
equity securities of the Company or any of its subsidiaries.
ARTICLE III.
Representations and Warranties of the Stockholders
Each Stockholder severally as to itself, but not jointly or as to any other
Stockholder, represents and warrants to the Company as follows:
Section 3.1 Authority for this Agreement. The execution and delivery of this
Agreement by such Stockholder and the consummation by such Stockholder of the
transactions contemplated hereby have been duly and validly authorized by all
necessary action on its part. This Agreement has been duly and validly
executed and delivered by such Stockholder and, assuming this Agreement
constitutes a valid and binding obligation of the Company, constitutes a valid
and binding agreement of such Stockholder enforceable against such Stockholder
in accordance with the terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency and similar laws affecting creditor's rights
generally and to general principals of equity (whether considered in a
proceeding in equity or at law).
Section 3.2 No Violation. Neither the execution and delivery of this
Agreement by such Stockholder nor the consummation of the transactions
contemplated hereby will conflict with or result in any breach of any
provision under such Stockholder's partnership agreement or similar governing
documents of such Stockholder.
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ARTICLE IV.
Board Representation and Voting
Section 4.1 Board Representation.
(a) On the Effective Date the size of the Board of Directors will be fixed
at eleven members and the Company will cause the persons named on Schedule 4.1
(or subject to Section 4.1(i), such other substitute persons as may be
designated by Apollo as Stockholder Designees) to be initially elected to the
Board of Directors by virtue of the Recapitalization Merger contemplated by
the Merger Agreement. Until the earlier of (i) the date on which the
Stockholders beneficially own, collectively, less than 25% of the Shares or
(ii) the date the Standstill Period ends by virtue of Section 5.2(g) hereof
(the "Stockholder Designee Period"), the Company agrees, subject to Section
4.1(i), to support the nomination of, and the Company's Nominating Committee
shall recommend to the Board of Directors the inclusion in the slate of
nominees recommended by the Board of Directors to stockholders for election as
directors at each annual meeting of stockholders of the Company (A) six
Stockholder Designees if the Stockholders beneficially own a number of shares
of Common Stock equal to 66 2/3% or more of the Shares, (B) four Stockholder
Designees if the Stockholders beneficially own a number of shares of Common
Stock equal to 50% or more but less than 66 2/3% of the Shares, or (C) two
Stockholder Designees if the Stockholders beneficially own 25% or more but
less than 50% of the Shares (each a "Beneficial Ownership Threshold");
provided, that in no event will more than four of such Stockholder Designees
be Associates of Apollo (each Stockholder Designee who is an Associate of
Apollo is hereafter referred to as an "Apollo Director"). Notwithstanding the
foregoing, if at any time after the third anniversary of the Effective Date,
the number of shares of Company Common Stock beneficially owned by the
Stockholders aggregate less than forty percent (40%) of the total number of
shares of the Company's Common Stock of all classes entitled to vote in the
election of directors as are then outstanding ("Total Shares Outstanding"),
the maximum number of Stockholder Designees shall be the lowest whole number
which when compared to the total number of directors of the Company (including
all vacancies) is equal to or greater than the percentage which the aggregate
number of shares of Company Common Stock beneficially owned by the
Stockholders bears to the Total Shares Outstanding.
(b) If any vacancy on the Company's Board of Directors occurs (by virtue of
the death, retirement, disqualification, removal from office or other cause of
a Stockholder Designee), prior to a meeting of the Company's stockholders, the
Nominating Committee shall appoint, subject to Section 4.1(i), a person
designated by Apollo to fill such vacancy (except if such vacancy occurs as a
result of the reduction of the number of Stockholder Designees entitled to be
included on the Board of Directors by reason of a decrease in the
Stockholders' beneficial ownership of Common Stock pursuant to Section 4.1(a))
and each such person shall be a Stockholder Designee for purposes of this
Agreement.
(c) In the event the size of the Company's Board of Directors is increased,
Apollo will have the right, subject to Section 4.1(i) hereof, to nominate such
additional number of persons to serve as Stockholder Designees such that the
total number of Stockholder Designees is equal to the lowest whole number
which when compared to the total number of directors (including all vacancies)
of the Company, is equal to or greater than the percentage which the aggregate
number of shares of Company Common Stock then beneficially owned by the
Stockholders bears to the Total Shares Outstanding.
(d) On the Effective Date, the Company will cause the persons indicated on
Schedule 4.1 to be initially named to a nominating committee (the "Nominating
Committee") of the Board of Directors and at all times during the Stockholder
Designee Period, (i) the size of the Nominating Committee will be fixed at
five members, two of whom will be Stockholder Designees who are Apollo
Directors and one of whom will be the Chief Executive Officer (if he or she is
a director), and (ii) nominees for director that are not Stockholder Designees
shall be designated exclusively by vote of not less than a majority of the
members of the Nominating Committee.
(e) Notwithstanding the foregoing, the Company shall have no obligation to
support the nomination, recommendation or election of any Stockholder Designee
pursuant to this Section 4.1 or any other obligation under this Section 4.1 if
the Stockholders are in breach of any material provision of this Agreement.
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(f) Other than any committee formed for the purpose of considering matters
relating to the Stockholders or as set forth above with respect to the
Nominating Committee, (i) if the Stockholders are entitled to include at least
four Stockholder Designees for election to the Board of Directors under this
Agreement, the Stockholders shall be entitled to have such number of
Stockholder Designees serve on each committee of the Board of Directors that
provides the Stockholders with representation (as a percentage) equal to no
less than the percentage which the number of shares of Common Stock
beneficially owned by the Stockholders bears to the Total Shares Outstanding,
provided that under no circumstances shall Apollo Directors serve as a
majority of any committee other than a committee formed for the purpose of
considering matters relating to the cash or other compensation of officers and
employees of the Company; or (ii) if the Stockholders are entitled to include
two Stockholder Designees for election to the Board of Directors under this
agreement, the Stockholders shall be entitled to have one Stockholder Designee
serve on each committee of the Board of Directors.
(g) Upon any decrease in the Stockholders' beneficial ownership of Common
Stock below any Beneficial Ownership Threshold, Apollo shall use its best
efforts to cause a number of Stockholder Designees to offer to immediately
resign from the Company's Board of Directors (subject to acceptance by the
Board of Directors) such that the number of Stockholder Designees serving on
the Board of Directors immediately thereafter will be equal to the number of
Stockholder Designees which Apollo would then be entitled to designate under
Section 4.1(a). Upon termination of the Stockholder Designee Period, Apollo
shall promptly offer to cause all of the Stockholder Designees to resign from
the Board of Directors (subject to acceptance by the Board of Directors)
thereof and the Company's obligations under this Section 4.1 shall terminate.
(h) The Company and each Stockholder shall use commercially reasonable
efforts to call, or cause the appropriate officers and directors of the
Company to call, a special meeting of stockholders of the Company and to vote
all of the shares of Common Stock owned or held of record by them for, or to
cause to be taken actions by written consent in lieu of any such meeting
necessary to cause, the removal (with or without cause) of any Stockholder
Designee if Apollo requests such director's removal in writing for any reason.
Except as provided in this Section 4.1(h), each Stockholder agrees that, at
any time that it is then entitled to vote for the election or removal of
directors, it will not vote in favor of the removal of any Stockholder
Designee unless (i) such removal shall be at the request of Apollo pursuant to
the provisions of Section 4.1(h), (ii) the right of the party who nominated
such director to do so has terminated in accordance with Section 4.1(a) above,
or (iii) such removal is in accordance with the requirements of Section 4.1(i)
below.
(i) Notwithstanding the provisions of this Section 4.1, Apollo shall not be
entitled to designate any person to the Company's Board of Directors (or any
committee thereof) in the event that (x) the Company receives a written
opinion of its outside counsel that such Stockholder Designee would not be
qualified under applicable law, rule or regulation to serve as a director of
the Company or (y) if the Nominating Committee objects to such Stockholder
Designee because such Stockholder Designee has been involved in any of the
events enumerated in Item 2(d) or (e) of Schedule 13D or such person is
currently the target of an investigation by any governmental authority or
agency relating to felonious criminal activity or is subject to any order,
decree, or judgment of any court or agency prohibiting service as a director
of any public company or providing investment or financial advisory services
and, in any such event, Apollo shall withdraw the designation of such proposed
Stockholder Designee and designate a replacement therefor (which replacement
Stockholder Designee shall also be subject to the requirements of this
Section). The Company shall use its reasonable best efforts to notify Apollo
of any objection to a Stockholder Designee sufficiently in advance of the date
on which proxy materials are mailed by the Company in connection with such
election of directors to enable Apollo to propose a replacement Stockholder
Designee in accordance with the terms of this Agreement. Apollo agrees to
remove any Stockholder Designee objected to by the Nominating Committee on the
grounds specified in clause (y) above.
(j) The Company shall not, and shall not permit any of its subsidiaries to,
without the consent of two-thirds of the entire Board of Directors of the
Company, take any action that under the Charter Documents or this Agreement
requires the approval of two-thirds of the entire Board of Directors of the
Company if any of the Stockholder Designees approving (and whose vote is
necessary to approve) such action are Persons whose
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removal from the Board of Directors has been requested at or prior to the time
of such action by Apollo pursuant to Section 4.1(a), unless such action has
been ratified by the reconstituted Board of Directors following such removal
and election of successors.
(k) Each Stockholder Designee serving on the Board of Directors shall be
entitled to all compensation and stock incentives granted to directors who are
not employees of the Company on the same terms provided to such directors.
(l) Notwithstanding anything in this Agreement to the contrary, in
connection with a Transfer of at least 66 2/3% of the Shares to a single
transferee, whether by a single transaction or a series of transactions,
Apollo may, by written notice to the Company, and with the affirmative
approval of not less than two-thirds of the entire Board of Directors of the
Company (including a vote that complies with Section 3.09(d)(2) of the
Company's By-laws) assign all rights granted to Apollo under this Section 4.1
to such transferee (to the exclusion of other Stockholders) and, without
limiting the foregoing, such transferee's rights to designate directors under
this Section 4.1 shall not be reduced until such transferee ceases to
beneficially own at least 66 2/3%, 50% or 25%, as the case may be, of the
number of Shares or as such number of directors is otherwise reduced in
accordance with Section 4.1. Any approval to such Transfer by the requisite
vote of the Company's Board of Directors shall constitute the approval
referred to in Section 203(a)(1) of the Delaware General Corporation Law, as
amended.
Section 4.2 Voting. Each Stockholder agrees that during the Standstill
Period such Stockholder shall, and shall cause its Affiliates to, use
commercially reasonable efforts to be present, in person or represented by
proxy, at all meetings of stockholders of the Company so that all Voting
Securities beneficially owned by such Stockholder shall be counted for the
purpose of determining the presence of a quorum at such meetings. Each
Stockholder agrees that during the Standstill Period in connection with the
election of directors of the Company, such Stockholder shall vote or cause to
be voted all Voting Securities beneficially owned by such Stockholder to elect
all individuals nominated by the Nominating Committee, unless to do so would
violate the provisions of Section 4.1. Notwithstanding the foregoing, during
the effectiveness of the Proxy and Voting Agreement (the "Proxy Agreement"),
dated the date hereof, between Apollo Management, L.P. and the Other
Stockholders, the Other Stockholders may rely (in accordance with the terms
thereof) on the proxy designated therein to take any action required by this
Section 4.2 on their behalf.
ARTICLE V.
Standstill
Section 5.1 Standstill. During the period beginning on the date hereof and
ending on the earliest to occur of (A) the tenth anniversary of the Effective
Date, (B) the date on which the Stockholders own, collectively, Voting
Securities which would represent less than 10% of the voting power in the
general election of directors of the Company, on a fully diluted basis, of all
Voting Securities then outstanding or (C) a Termination Event under any
subdivision of Section 5.2 (such period, the "Standstill Period"), each
Stockholder will not, and will cause each of its Affiliates and Associates
(provided, however, that this Section 5.1 shall not relate to Voting
Securities of Associates to the extent such Voting Securities were originally
acquired by such Associates pursuant to the Merger Agreement or the GranCare
Merger Agreement or were acquired prior to the date hereof) not to, directly
or indirectly:
(i) acquire, offer to acquire (by tender or exchange offer or otherwise),
or agree to acquire, by purchase or otherwise, any Voting Securities or
voting rights or direct or indirect rights or options to acquire any Voting
Securities of the Company or any of its Affiliates other than (A) the
exercise of convertible securities acquired in compliance with the terms of
this Agreement, or an acquisition as a result of a stock split, stock
dividend or similar recapitalization, (B) the acquisition of shares of
Common Stock pursuant to the Merger Agreement or the GranCare Merger
Agreement, (C) acquisitions by all Stockholders, their Affiliates and
Associates in the aggregate of Voting Securities representing up to the
lesser of (x) an additional 5% of the total number of Voting Securities
outstanding immediately after the Effective Time (as such number may
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be appropriately adjusted to reflect stock splits, reverse stock splits,
stock dividends or any other recapitalization of the Company) or (y) an
aggregate number of Voting Securities (including the Shares) equal to 49%
of the Total Shares Outstanding; (D) stock options or similar rights
granted by the Company to an Affiliate of such Stockholder as compensation
for performance as a director or officer of the Company or its subsidiaries
(and any shares issuable upon exercise thereof), (E) transfers among
Stockholders or (F) any rights which are granted to all stockholders of the
Company (and any share issuable upon exercise thereof); provided, however,
that if the Stockholders or any of their Affiliates or Associates in good
faith inadvertently acquire not more than 100,000 shares of Common Stock in
violation of these provisions and within 15 days after the first date on
which the Stockholders have actual knowledge (including by way of written
notice given by the Company) that a violation has occurred, the
Stockholders or any of their Affiliates or Associates shall have
transferred any shares of Common Stock held in violation of these
provisions to unrelated third parties so that the Stockholders and their
Affiliates or Associates no longer beneficially own any such shares or have
any agreement or understanding relating to such shares, this Section 5.1
shall be deemed not to have been violated; and provided further, that no
violation of this provision shall be deemed to have occurred by reason of
the indirect acquisition of beneficial ownership of securities resulting
from (aa) investments in investment funds as to which no Stockholder or
Affiliate or Associate thereof has control or power to control with respect
to voting or investment decisions or (bb) acquisitions of securities by a
limited partner in any Stockholder or Affiliates or Associates thereof as
to which limited partner no Stockholder or its Affiliates or Associates has
control or power to control;
(ii) except pursuant to this Agreement or the Proxy Agreement, form, join
or in any way participate in a Group with respect to any securities of the
Company or its Affiliates, other than with other Stockholders or Affiliates
or Associates of any Stockholder; provided, however, that in the case of
securities other than Voting Securities, Stockholders may participate in a
Group with respect thereto with the prior approval of two-thirds of the
entire Board of Directors (which approval is requested in a manner which
does not require disclosure publicly or to any third party);
(iii) grant a proxy to any Person other than (I) an Affiliate or
Associate of a Stockholder, (II) the proxy granted to Apollo pursuant to
the Proxy Agreement or (III) proxies designated by the Board of Directors
of the Company in connection with any contested election, or otherwise
make, or in any way cause or participate in, any "solicitation" of
"proxies" to vote (as those terms are defined in Regulation 14A under the
Exchange Act) with respect to the Company or its Affiliates, or communicate
with, seek to advise, encourage or influence any Person, in any manner,
with respect to the voting of, securities of the Company or its Affiliates,
or become a "participant" in any "election contest" (as those terms are
defined or used in Rule 14a-11 under the Exchange Act) with respect to the
Company or its Affiliates (other than (A) non-public communications with
other Stockholders or Affiliates or Associates of any Stockholder which
would not require public disclosure by any Person or (B) with the prior
approval of a two thirds majority of the entire Board of Directors (which
approval is requested in a manner which does not require disclosure
publicly or to any third party));
(iv) initiate, propose or, except with the prior approval of two-thirds
of the entire Board of Directors (which approval is requested in a manner
which does not require disclosure publicly or to any third parties)
otherwise solicit stockholders for the approval of one or more stockholder
proposals with respect to the Company or its Affiliates or induce or
attempt to induce any other Person to initiate any stockholder proposal or
seek election to or seek to place a representative on the Board of
Directors of the Company (except pursuant to Section 4.1 of this Agreement)
or its Affiliates or seek the removal of any member of the Board of
Directors of the Company or its Affiliates (for this purpose, the actions
of the Stockholder Designees in communicating (without public disclosure or
disclosure to third parties) with the Board of Directors in their capacity
as directors of the Company, and non-public communication by a Stockholder
with other Stockholders or Affiliates of any Stockholder which would not
require public disclosure by any Person, shall not be deemed to be in
contravention of this paragraph (iv)); or
(v) make any public announcement with respect to, or submit any proposal
for, any transaction involving the Company, on the one hand, and Apollo or
any Affiliates of Apollo, on the other hand, which
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would be deemed a "business combination" under the provisions of Section
203(c)(3)(i)-(iv) of the DGCL, whether or not such proposal might require
public disclosure by the Company, unless such proposal is directed and
disclosed solely to the Board.
provided, that this Section 5.1 shall not restrict or inhibit the rights of a
Stockholder to exercise its voting rights as a stockholder of the Company
(subject to Section 4.2).
Section 5.2 Early Termination of Standstill. The obligations of the
Stockholders under Section 5.1 shall terminate at the election of the
Stockholders (by majority vote) upon the occurrence of any of the following
events (each a "Termination Event"):
(a) At least $10 million in indebtedness for monies borrowed by the
Company or its subsidiaries shall have been accelerated;
(b) One or more judgments or decrees shall be entered against the Company
or any of its Subsidiaries involving in the aggregate a liability (not paid
or fully covered by insurance as to which the relevant insurance company
has acknowledged coverage) of $10 million or more and any such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending
appeal within 30 days from the entry thereof;
(c) The Company or any material subsidiary shall file a petition in
bankruptcy or for reorganization or for an arrangement or any composition,
readjustment, liquidation, dissolution or similar relief pursuant to Title
11 of the United States Code or under any similar present or future federal
law or the law of any other jurisdiction or shall be adjudicated a bankrupt
or insolvent, or consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Company or for all or any substantial part of its
property, or shall make a general assignment for the benefit of its
creditors;
(d) A petition or answer shall be filed proposing the adjudication of the
Company or any material subsidiary as bankrupt or its reorganization or
arrangement, or any composition, readjustment, liquidation, dissolution or
similar relief with respect to it pursuant to Title 11 of the United States
Code or under any similar present or future law or the law or any other
jurisdiction, and the Company shall consent to or acquiesce in the filing
thereof, or such petition or answer shall not be discharged or denied
within 60 days after the filing thereof;
(e) The Company shall be in material breach of its obligations to the
Stockholders under their Registration Rights Agreement and such breach
shall not have been cured within 20 days after receipt by the Company from
the Stockholders of a written notice specifying such breach and requiring
it to be remedied, and the Company shall not in good faith be contesting
whether such breach has occurred;
(f) If the Company shall, in breach of its obligations under this
Agreement, fail to nominate for election to the Board of Directions any
Stockholder Designee who satisfies the requirements for designation to the
Board of Directors set forth in Section 4.1 (i) or if the stockholders of
the Company shall fail to elect to the Board of Directors all Stockholder
Designees nominated in accordance with Section 4.1; or
(g) At any time after the expiration of six (6) years from the Effective
Date.
Section 5.3 Notice of Proposed Acquisitions. In order to enable the
Stockholders to comply with the provisions of Section 5.1, prior to the end of
the Standstill Period, none of the Other Stockholders shall acquire, offer to
acquire (by tender or exchange offer or otherwise), or agree to acquire, by
purchase or otherwise, any Voting Securities or voting rights or direct or
indirect rights or options to acquire any Voting Securities of the Company or
any of its Affiliates (other than as contemplated by Sections 5.1(i)(A), (B),
(D), (E) or (F) hereof) without prior written consent of Apollo.
ARTICLE VI.
Transfer
Section 6.1 Transfer. Subject to the provisions of the Proxy Agreement, the
Other Stockholders may sell, transfer, assign or otherwise dispose of any of
the Shares; provided, however, that no Other Stockholder
9
shall sell, transfer, assign or otherwise dispose of any of the Shares unless
(i) such Other Stockholder delivers written notice to Apollo of its intent to
transfer Shares not less than five (5) business days prior to such transfer,
and (ii) if such transfer occurs other than pursuant to an Exempted Transfer
(as defined below), such transferee becomes a party to this Agreement
(whereupon such transferee shall become an "Other Stockholder" hereunder). Any
purported transfer in violation of the provisions of this Agreement (an
"Unauthorized Transfer") shall be null and void. The Company will not
register, recognize or give effect to an Unauthorized Transfer and the
purported transferee of any Shares pursuant to an Unauthorized Transfer will
not thereby acquire any rights in such Shares. The Company will, immediately
upon becoming aware of an actual or attempted Unauthorized Transfer, instruct
the transfer agent for the Shares to issue an appropriate stop transfer order
with regard to such transaction or attempted transaction.
An "Exempted Transfer" hereunder (which shall not be subject to the transfer
conditions set forth in clause (ii) of the first sentence of the preceding
paragraph) shall mean: (a) any transfer by any Other Stockholder to its
respective equity owners, whether by way of a distribution, return of capital,
dividend or otherwise, or (b) any sale of Shares by any Other Stockholder
either (1) pursuant to a registered public offering under the Securities Act,
(2) pursuant to Rule 144 or Rule 145 promulgated under the Securities Act or
(3) pursuant to a broker to broker sale executed on any national securities
exchange or traded on the National Market System of NASDAQ.
Section 6.2 Tag-Along Rights. If Apollo or any of their respective
Affiliates proposes to enter into an agreement with respect to or otherwise
enter into a bona fide sale transaction (a "Third-Party Sale") of Shares to a
third party other than an Affiliate of Apollo, Apollo shall first provide the
Company and each Other Stockholder a written notice (the "Third Party Sale
Notice") specifying (i) the nature and amount of consideration to be paid to
the Stockholders upon consummation of the Third Party Sale, (ii) the identity
of the third party purchaser, and (iii) all other material terms of such
proposed Third Party Sale, including the proposed closing date. If an Other
Stockholder delivers a written notice (a "Co-Sale Notice") to Apollo on or
prior to the fifth business day after the giving of the Third Party Sale
Notice, such Other Stockholder shall be permitted to sell, on the same terms
as Apollo, a portion of the total number of Shares sold in such Third Party
Sale equal to the lesser of (i) the amount specified by such Other Stockholder
in its Co-Sale Notice and (ii) the product of (A) such Other Stockholder's
Allocation Percentage and (B) the total number of Shares to be sold in such
Third Party Sale. The "Allocation Percentage" of each Other Stockholder at any
time will be a fraction, the numerator of which is the number of Shares owned
by such Other Stockholder and the denominator of which is the number of Shares
owned by all Stockholders desiring to include Shares in such Third Party Sale.
The provisions of this Section 6.2 shall not apply to any transfer to an
Affiliate of Apollo or pursuant to a public offering.
Section 6.3 Drag-Along Rights. (a) Each Stockholder shall transfer all, but
not less than all Shares then owned by such Stockholder, in connection and
together with the sale of all, but not less than all of the Shares then owned
by Apollo and its Affiliates and the Other Stockholders in a bona fide
transaction (a "Drag Transaction") to any person who is not an Affiliate of
Apollo (a "Purchaser"). Prior to consummating any Drag Transaction, Apollo
will deliver to each Other Stockholder a written notice (a "Sale Notice")
specifying (i) the nature and aggregate amount of consideration (the "Sale
Price") to be paid to the Stockholders upon the consummation of the Drag
Transaction, (ii) the identity of the Purchaser, and (iii) all other material
terms of such proposed Drag Transaction, including the proposed date of the
closing of the Drag Transaction (the "Drag Transaction Closing Date"). On the
Drag Transaction Closing Date, each Stockholder shall sell to the Purchaser
100% of the Shares then held by such Stockholder on the terms and subject to
the conditions set forth in the Sale Notice. If any Stockholder fails to
deliver certificates representing its Shares as required by this Section 6.3,
such Stockholder (i) shall not be entitled to the consideration it is to
receive in the Drag Transaction until it cures such failure (provided, that
after curing such failure it shall be so entitled to such consideration
without interest), (ii) shall for all purposes be deemed no longer to be a
stockholder of the Company and have no voting rights, (iii) shall not be
entitled to any dividends or other distributions declared after the Drag
Transaction Closing Date with respect to the Shares held by it, (iv) shall
have no other rights or privileges granted to Stockholders under this or any
future agreement and (v) in the event of liquidation of the Company, its
rights with respect to any consideration it would have received if it had
complied with this Section 6.3, if any, shall be subordinate to the rights of
any equity holder. This Section 6.3 shall inure to the benefit of, and be
enforceable
10
by, Apollo and its Related Persons. "Related Person" means, with respect to
any person, (i) any Affiliate of such person, (ii) any investment manager,
investment advisor or general partner of such person, and (iii) any investment
fund, investment account or investment entity whose investment manager,
investment advisor or general partner is such person or a Related Person of
such person.
(b) The obligations of the Other Stockholders pursuant to this Section 6.3
are subject to the satisfaction of the following conditions:
(i) if any Stockholder is given an option as to the form and amount of
consideration to be received, all Stockholders will be given the same
option (except that no Stockholder shall be required in any circumstance to
accept consideration for its Shares in a form other than cash, cash
equivalents or securities listed for trading on any national securities
exchange or traded on the National Market System of NASDAQ);
(ii) no Other Stockholder shall be obligated to make any out-of-pocket
expenditure prior to the consummation of the Drag Transaction (excluding
modest expenditures for its own postage, copies, etc., and the fees and
expenses of its own counsel retained by it), and no Other Stockholder shall
be obligated to pay more than its or his pro rata share (based upon the
amount of consideration received for or with respect to its or his Shares)
of reasonable expenses incurred in connection with such Drag Transaction to
the extent such costs are incurred for the benefit of all Stockholders and
are not otherwise paid by the Company or the acquiring party (including the
costs of one counsel chosen by Apollo on behalf of the Stockholders and one
counsel chosen by the holders of a majority of the Shares held by the Other
Stockholders) (costs incurred by or on behalf of an Other Stockholder for
its or his sole benefit will not be considered costs of the transaction
hereunder); provided, however, that any Other Stockholder's liability for
its or his pro rata share of such allocated expenses shall be capped at the
total purchase price received by such Other Stockholder for its or his
Shares; and
(iii) (A) in the event that the Stockholders are required to provide any
representations or warranties in connection with the Drag Transaction, each
Other Stockholder shall only be required to represent and warrant as to its
or his title to its or his Shares, and such Other Stockholder's authority,
power, and right to enter into and consummate such other purchase agreement
without violating any other agreement or legal requirement, and (B) in the
event that the Other Stockholders are required to provide any indemnities
in connection with the Drag Transaction, then each Other Stockholder shall
not be liable for more than his pro rata share (based upon the amount of
consideration received for or with respect to its or his Shares) of any
liability for indemnity and such liability shall not exceed the total
purchase price received by such Other Stockholder for its or his Shares.
Section 6.4 Regulatory Compliance Cooperation.
(a) If a Regulated Holder (as defined below) determines that it has a
Regulatory Problem, the Company and the other Stockholders will (i) take all
such actions to avoid or cure such Regulatory Problem as are reasonably
requested by such Regulated Holder in order (A) to effectuate and facilitate a
Transfer by such Regulated Holder of any securities of the Company then held
by such Regulated Holder to any Person designated by such Regulated Holder,
(B) to permit such Regulated Holder (or any Affiliate of such Regulated
Holder) to exchange all or any portion of the Voting Securities of the Company
then held by such Person on a share-for-share basis for shares of a class of
nonvoting Securities of the Company, which nonvoting Securities shall be
identical in all respects to such Voting Securities, except that such
nonvoting Securities shall be nonvoting and shall be convertible into Voting
Securities of the Company on such terms as are requested by such Regulated
Holder in light of regulatory considerations then prevailing, and (C) to
preserve and continue the respective allocation of the voting interests and
powers with respect to the Company arising out of such Regulated Holder's
ownership of Voting Securities of the Company and as provided in this
Agreement before the transfers and amendments referred to above (including
entering into such additional agreements as are reasonably requested by such
Regulated Holder to permit a Person designated by such Regulated Holder to
exercise voting power relinquished by such Regulated Holder upon any exchange
of Voting Securities of the Company for nonvoting
11
securities of the Company), and (ii) enter into such additional agreements,
adopt such amendments to this Agreement, the Charter Documents of the Company
and other relevant agreements and take such additional actions, in each case
as are reasonably requested by such Regulated Holder, in order to effectuate
the purpose and intent of the foregoing.
(b) If a Regulated Holder elects to transfer securities of the Company to
another Regulated Holder in order to avoid or cure a Regulatory Problem, the
Company and the other Stockholders shall enter into such agreements with such
other Regulated Holder and its Affiliates as it may reasonably request in
order to assist such other Regulated Holder and its Affiliates in complying
with all Applicable Laws. Such agreements may include restrictions on the
conversion, redemption, repurchase or retirement of securities of the Company
that would result or be reasonably expected to result in such Regulated Holder
or its Affiliates holding more Voting Securities or total equity interests in
the Company than it is permitted to hold under such Applicable Laws.
(c) If a Regulated Holder has the right or opportunity to acquire any of the
Company's or its Subsidiaries' securities (as the result of a preemptive
offer, pro-rata offer or otherwise), at such Regulated Holder's request the
Company will offer to sell (or if the Company is not the seller, to cooperate
with the seller and such Regulated Holder to permit such seller to sell) such
non-voting Securities on the same terms as would have existed had such
Regulated Holder acquired the securities so offered and immediately requested
their exchange for non-voting securities pursuant to Section 6.4(a).
(d) Each Stockholder agrees to cooperate with the Company in complying with
this Section 6.4, including voting to approve amending the Charter Documents
or this Agreement in a manner reasonably requested by the Regulated Holder
requesting such amendment.
(e) The Company and each Stockholder agree not to amend or waive the voting
or other provisions of the Company's certificate or articles of incorporation
or by-laws, or other constitutive and governing instruments and documents, or
this Agreement if in any such case such amendment or waiver would cause any
Regulated Holder to have a Regulatory Problem and such Regulated Holder has so
notified the Company that it would have a Regulatory Problem promptly after it
has notice of such proposed amendment or wavier.
(f) In this Agreement, the following capitalized terms have the meanings
given to them below:
"Regulated Holder" means any holder of the Company's securities that is
(or that is a subsidiary of a bank holding company that is) subject to the
various provisions of Regulation Y of the Board of Governors of the Federal
Reserve Systems. 12 C.F.R., Part 225 (or any successor to Regulation Y).
"Regulatory Problem" means (i) any set of facts or circumstances wherein
it has been asserted by any governmental regulatory agency (or a Regulated
Holder believes that there is a significant risk of such assertion) that
such Person (or any bank holding company that controls such Person) is not
entitled to hold, or exercise any material right with respect to, all or
any portion of the securities of the Company which such Person holds or
(ii) when such Person and its Affiliates would own, control or have power
(including voting rights) over a greater quantity of securities of the
Company than is permitted under any law or regulation or any requirement of
any governmental authority applicable to such Person or to which such
Person is subject.
Section 6.5 Legend. Each certificate issued to represent any Shares shall
bear the following (or a substantially equivalent) legend:
The transfer of these securities is subject to restrictions set forth in
a Stockholders Agreement, dated as of November 4, 1997, a copy of which is
available for inspection at the office of the Corporation.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon the
completion of a public distribution of securities of the Company represented
thereby) shall also bear such legend, unless the restrictions contained in
this Agreement are no longer in effect.
12
ARTICLE VII.
Miscellaneous
Section 7.1 Amendment and Modification. Any provision of this Agreement may
be waived, provided that such waiver is set forth in a writing executed by the
party against whom the enforcement of such waiver is sought. This Agreement
may not be amended, modified or supplemented other than by a written
instrument signed by (a) the Company (in accordance with the approval of two-
thirds of the entire Board of Directors, including a majority of the directors
who are not an Affiliate or an Associate of any Stockholder), and (b) the
holders of a majority of the Shares held by the Stockholders; provided,
however, that so long as Apollo beneficially owns at least 25% of the Shares
held by Apollo on the Effective Date, without the consent of Apollo, no
amendment or modification which adversely affects the rights or duties of
Apollo hereunder may be effected; and provided, further, that no amendment or
modification that would have a material adverse effect on the rights or
obligations of any Other Stockholder without similarly and proportionately
(based on the respective number of Shares then owned by the Other Stockholders
hereunder) affecting the rights and obligations of all Other Stockholders
hereunder, or that would otherwise unfairly discriminate against any Other
Stockholder shall be effective as to such Other Stockholder unless such Other
Stockholder shall have consented in writing thereto. No course of dealing
between or among any Persons having any interest in this Agreement will be
deemed effective to modify, amend or discharge any part of this Agreement or
any rights or obligations of any Person under or by reason of this Agreement.
Section 7.2 Successors and Assigns: Entire Agreement.
(a) This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns and executors, administrators and heirs; provided, that except as
otherwise specifically permitted pursuant to this Agreement, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by the Company without the prior written consent of each of the
Stockholders.
(b) This Agreement sets forth the entire agreement and understanding between
the parties as to the subject matter hereof and merges and supersedes all
prior discussions, agreements and understandings of any and every nature among
them.
Section 7.3 Separability. In the event that any provision of this Agreement
or the application of any provision hereof is declared to be illegal, invalid
or otherwise unenforceable by a court of competent jurisdiction, the remainder
of this Agreement shall not be affected except to the extent necessary to
delete such illegal, invalid or unenforceable provision unless that provision
held invalid shall substantially impair the benefits of the remaining portions
of this Agreement.
13
Section 7.4 Notices. All notices, demands, requests, consents or approvals
(collectively, "Notices") required or permitted to be given hereunder or which
are given with respect to this Agreement shall be in writing and shall be
personally delivered or delivered by a reputable overnight courier service
with charges prepaid, or transmitted by hand delivery, telegram, telex or
facsimile, addressed as set forth below, or such other address as such party
shall have specified most recently by written notice. Notice shall be deemed
given or delivered on the date of service or transmission if personally served
or transmitted by telegram, telex or facsimile. Notice otherwise sent as
provided herein shall be deemed given or delivered on the next business day
following delivery of such notice to a reputable overnight courier service.
To the Company:
Paragon Health Network, Inc.
Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Chief Executive Officer
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
To Apollo:
c/o Apollo Advisors II, L.P.
0 Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxxxxx
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Sidley & Austin
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
To the Other Stockholders:
To the address specified on the signature page executed by such Other
Stockholder.
Section 7.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal law of the State of Delaware without giving
effect to principles of conflicts of law.
Section 7.6 Headings. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall
they affect their meaning, construction or effect.
Section 7.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original instrument and
all of which together shall constitute one and the same instrument.
Section 7.8 Further Assurances. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out
the provisions and purposes of this Agreement and the transactions
contemplated hereby.
Section 7.9 Termination. Unless sooner terminated in accordance with its
terms or as otherwise herein provided, this Agreement shall terminate upon the
earlier to occur of (i) the mutual agreement by the parties hereto, (ii) with
respect to any Stockholder, such Stockholder ceasing to own any Shares or
(iii) the tenth anniversary of the Effective Date.
14
Section 7.10 Remedies. In the event of a breach or a threatened breach by
any party to this Agreement of its obligations under this Agreement, any party
injured or to be injured by such breach will be entitled to specific
performance of its rights under this Agreement or to injunctive relief, in
addition to being entitled to exercise all rights provided in this Agreement
and granted by law. The parties agree that the provisions of this Agreement
shall be specifically enforceable, it being agreed by the parties that the
remedy at law, including monetary damages, for breach of any such provision
will be inadequate compensation for any loss and that any defense or objection
in any action for specific performance or injunctive relief that a remedy at
law would be adequate is waived.
Section 7.11 Pronouns. Whenever the context may require, any pronouns used
herein shall be deemed also to include the corresponding neuter, masculine or
feminine forms.
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
PARAGON HEALTH NETWORK, INC.
By:/s/ Xxxxx Xxxxxx Xxxxxxx
----------------------------------
Name:
Title:
APOLLO:
APOLLO INVESTMENT FUND III, L.P.
By: Apollo Advisors II, L.P.
Its General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By:/s/ Xxxxxxx Xxxxxx
----------------------------------
Name:
Title:
4,366,790 Shares of Common Stock
APOLLO UK PARTNERS III, L.P.
By: Apollo Advisors II, L.P.
Its General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By:/s/ Xxxxxxx Xxxxxx
----------------------------------
Name:
Title:
161,396 Shares of Common Stock
APOLLO OVERSEAS PARTNERS III, L.P.
By: Apollo Advisors II, L.P.
Its General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By:/s/ Xxxxxxx Xxxxxx
----------------------------------
Name:
Title:
261,011 Shares of Common Stock
16
OTHER STOCKHOLDERS
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners
Its General Partner
By:/s/ Xxxxx X. Xxxxxxxx
----------------------------------
Name:
Title:
666,667 Shares of Common Stock
Address for Notice:
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
with a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
17
HEALTHCARE EQUITY PARTNERS, L.P.
By: Beecken, Xxxxx & Company, L.L.C.
Its General Partner
By:/s/ Xxxx X. Xxxxx
----------------------------------
Name: Xxxx X. Xxxxx
Title: Managing Director
60,864 Shares of Common Stock
Address for Notice:
x/x Xxxxxxx, Xxxxx & Xxxxxxx, X.X.X.
000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
HEALTHCARE EQUITY QP PARTNERS, L.P.
By: Beecken, Xxxxx & Company, L.L.C.
Its General Partner
By:/s/ Xxxx X. Xxxxx
----------------------------------
Name: Xxxx X. Xxxxx
Title: Managing Director
186,050 Shares of Common Stock
Address for Notice:
x/x Xxxxxxx, Xxxxx & Xxxxxxx, X.X.X.
000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
18
KEY CAPITAL CORPORATION
By:/s/ Xxxxxxx X. Xxxxxx, V.P.
----------------------------------
Xxxxxxx X. Xxxxxx
Vice President
92,593 Shares of Company Common Stock
Address for Notice:
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
KEY EQUITY PARTNERS 97
By:/s/ Xxxxxxx X. Xxxxxx, G.P.
----------------------------------
Xxxxxxx X. Xxxxxx
Its: General Partner
30,864 Shares of Company Common Stock
Address for Notice:
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
19
DRAX HOLDINGS L.P.
By: Xxxxx Corporation
Its General Partner
By:/s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
25,000 Shares of Common Stock
Address for Notice:
000 Xxxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
Telecopy No.: (000) 000-0000
WALNUT GROWTH PARTNERS
LIMITED PARTNERSHIP
By: Walnut GP, L.L.C.
Its General Partner
By:/s/ Xxxxxxx Xxxxx
----------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Member
24,691 Shares of Common Stock
Address for Notice:
Xxxxx 000
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx Xxxxx
Telecopy No.: (000) 000-0000
20
/s/ Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx
50,000 Shares of Common Stock
Address for Notice:
c/o Paragon Health Network, Inc.
0 Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
21
SCHEDULE 4.1
Stockholder Designees
Xxxxxxxx X. Xxxx*+
Xxxxx X. Xxxxxx*+
Xxxx X. Xxxxxxx*
Xxxxxx X. Xxxxx
GranCare Nominees
Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxx
Xxxxxxx X. Xxxxx, Xx.
LCA Nominees
Xxxxxx X. Xxxxxx
Chief Executive Officer
Xxxxx X. Pitts+
- --------
* Apollo Director
+ Nominating Committee
22
