EXHIBIT 10.8
SHAREHOLDERS AGREEMENT
BY AND AMONG
XXXXXX XXXXXX, M.D.
XXXX XXXXXX, M.D.
XXXXXXX CARBON, M.D.
XXXXXXX XXXXXX, M.D.
XXXXXXXX XXXXX, M.D.
XXXXXX XXXXX, M.D.
XXXXX X. XXXXX
PEAK LIQUIDATING, L.L.C.
XXXXXX XXX
XXXXXX XXXXX
XXXX XXXXXXXXX
XXXXXXX XXXXX
THE SHAREHOLDERS' AGENT
AND
EVEREST HEALTHCARE II, INC.
SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT (the "Agreement") is made and entered into as
of November 30, 1997 by and among PEAK LIQUIDATING, L.L.C. (a Delaware limited
liability company) ("Peak Liquidating"), XXXXXX XXXXXX, M.D., XXXX XXXXXX, M.D.,
XXXXXXX CARBON, M.D., XXXXXXX XXXXXX, M.D., XXXXXXXX XXXXX, M.D., XXXXXX XXXXX,
M.D. and XXXXX X. XXXXX (collectively, with Peak Liquidating, the "Peak
Shareholders"), XXXXXX XXX, XXXXXX XXXXX, XXXX XXXXXXXXX and XXXXXXX XXXXX
(collectively, the "HDA Shareholders"), EVEREST HEALTHCARE II, INC., a Delaware
corporation (the "Company"), XXXXXX XXX, as agent of the HDA shareholders (the
"Shareholder Agent"), and each other party executing or otherwise becoming a
party hereto. The Peak Shareholders and the HDA Shareholders, and each other
party executing or otherwise becoming a party hereto as a shareholder of the
Company, are hereinafter collectively referred to as the "Shareholders" and
individually referred to as a "Shareholder."
RECITALS
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A. In 1995, Everest Healthcare Services Corporation, a Delaware
corporation ("Everest"), was formed as a holding company for various affiliated
dialysis and perfusion facilities. A majority of the issued and outstanding
shares of common stock of Everest was owned by Peak Healthcare, L.L.C., a
Delaware limited liability company ("Peak"), the members of which were the Peak
Shareholders.
B. In 1996, Home Dialysis of America, Inc., an Arizona corporation
("HDA"), and certain other entities merged into Everest pursuant to the Merger
Agreement (as defined herein). As a result of this merger, the HDA Shareholders
became shareholders of Everest. Voting of the HDA Shareholders' shares of the
common stock of Everest was controlled by a Shareholders Agreement, dated as of
June 20, 1996 (the "Everest Shareholders Agreement"), among the HDA
Shareholders, Peak, Everest and the HDA Shareholders' Agent.
C. Peak has been incorporated as the Company and the Peak Shareholders
have become majority shareholders of the Company. Pursuant to an exchange
offer, the HDA Shareholders have exchanged their shares of common stock of
Everest for common stock, par value $.001, of the Company (the "Common Stock").
D. The Company and the Shareholders deem it desirable to enter into this
Agreement to establish certain rights and restrictions with respect to the
management of the Company and the voting, transfer and sale of shares of the
Common Stock held by the Shareholders.
E. The parties hereto are entering into this Agreement in substitution of
the Everest Shareholders Agreement.
PROVISIONS
NOW, THEREFORE, in consideration of the premises, the mutual covenants of
the parties hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. DEFINITIONS. The following terms will have the meaning for purposes of this
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AGREEMENT set forth below for such term.
"AFFILIATE" means (i) any shareholder, partner, member or other type of
equity owner of the Company, (ii) any Person or group of Persons who, directly
or indirectly, controls, is controlled by, or is under common control with the
Company, and (iii) any entity which, directly or indirectly, is controlled by
one or more of the Persons referred to in clause (i) or (ii) above .
"BOARD" means the board of directors of the Company.
"EFFECTIVE TIME" means the date and time at which the Certificate of Merger
as defined in the Merger Agreement was accepted for filing.
"FAMILY" means, with respect to any Shareholder who is a natural person,
such shareholder's spouse, child (natural, adopted or step), grandchild, parent,
siblings or a trust or partnership solely for the benefit of such shareholder
and/or any of the foregoing.
"GAAP" means generally accepted accounting principles as in effect from
time to time, applied by the Company and its subsidiaries.
"INDEPENDENT THIRD PARTY" means any Person who is not (i) directly or
indirectly a shareholder of the Company or (ii) an affiliate, spouse or
descendant by (birth or adoption) of a shareholder of the Company or owned or
controlled by any such Person.
"MANAGEMENT AGREEMENT" means that certain Management Services Agreement, by
and between Peak and Everest, dated as of October 1, 1995, as amended, restated
or otherwise modified and in effect.
"MERGER AGREEMENT" means that certain Agreement and Plan of Reorganization,
by and among Everest, Home Dialysis of America, Inc., an Arizona corporation,
HDA Acquisition, Inc., an Arizona corporation, the HDA Shareholders, and the HDA
Shareholders' Agent.
"NANI-IL" means Nephrology Associates of Northern Illinois, Ltd., a medical
corporation formed under the laws of Illinois.
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"NANI-IN" means Nephrology Associates of Northern Indiana, P.C., a
professional corporation formed under the laws of Indiana.
"ORIGINAL SHAREHOLDERS" shall mean the following persons who were the HDA
Shareholders and the Peak Shareholders of the Company: Xxxxxx Xxxxxx, Xxxx
Xxxxxx, Xxxxxx Xxxxx, M.D. Revocable Trust U/A/D _______, Xxxxxxx Carbon,
Xxxxxxxx Xxxxx, Xxxxxxx Xxxxxx, Xxxxx X. Xxxxx, Xxxxxx Xxx, Xxxxxx Xxxxx, Xxxx
Xxxxxxxxx and Xxxxxxx Xxxxx.
"PERSON" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization or other entity.
"PERMITTED TRANSFEREE" means (i) a Shareholder's spouse, parent,
descendant, or (ii) a trust or family partnership solely for the benefit of such
Shareholder, the Shareholder's spouse, parent and/or descendants at any time
that it holds Common Stock, (iii) a Revocable Trust of an Original Shareholder,
or (iv) such Shareholder's personal representative for purposes of
administration of such Shareholder's estate or upon such Shareholder's
incompetency for the purpose of the protection or management of such Person's
assets; provided, however, that if any proposed transferee is less than 21 years
of age at the time of a proposed Transfer to such Person, then such transfer may
only be made to a trustee of a valid trust for the benefit of such Person, which
trust shall not terminate prior to the beneficiary (or beneficiaries) thereof
attaining the age of 21.
"QUALIFIED PUBLIC OFFERING" means the sale, in an underwritten public
offering registered under the Securities Act, of shares of Common Stock, which
may include securities held by Shareholders, either alone or in conjunction with
each other, in which the price per share paid by the public for such securities
will be at least $10, reflecting a post-offering market capitalization for the
Company of at least $150 million.
"REVOCABLE TRUST" means with respect to an Original Shareholder a trust
created during his lifetime which (i) is amendable and revocable solely by such
Original Shareholder, and (ii) in which the Original Shareholder is the sole
trustee and sole beneficiary.
"SALE OF THE COMPANY" means any transaction between the Company and one or
more Independent Third Parties, including by consolidation, merger or
liquidation, pursuant to which such party or parties acquire (i) a majority of
the issued and outstanding shares of capital stock of the Company, or (ii) all
or substantially all of the Company's assets.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
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"TRANSFER" means any sale, disposition, assignment, pledge, hypothecation,
encumbrance or other transfer.
Each initial capitalized term not otherwise defined in this Agreement shall
have the definition set forth in the Merger Agreement.
2. CERTAIN AGREEMENTS.
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2.1 VOTING COMMITTEE.
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(a) A voting committee (the "Voting Committee") consisting of four
individuals designated by Peak and one individual designated by the
Shareholders' Agent shall be formed on the date hereof. The initial designees of
Peak to such committee shall be Xxxxx X. Xxxxx, Xxxxxx Xxxxxx, M.D., Xxxxxxx
Carbon, M.D., and Xxxx Xxxxxx, M.D. (the "Peak Designees"). The initial designee
of the Shareholders' Agent shall be Xxxxxx Xxx (the "HDA Designee").
Notwithstanding any provision contained herein, in the event of Xxxxxx Xxx'x
unavailability for any meeting of the Voting Committee, the HDA Directors shall
have full power to act as the HDA Designee. If any Peak Designee resigns from
such committee, the Peak Shareholders shall have the right to designate such
person's replacement on such committee. If the HDA Designee resigns from such
committee, the Shareholders' Agent shall have the right to designate such
person's replacement on such committee. The members of the Voting Committee
shall designate a secretary of such committee (the "Secretary").
(b) In the event the Shareholders of the Company are voting or consenting
to any matter, at the written request of the HDA Designee to the Company, the
Voting Committee shall be convened for a meeting in person or via telephone to
consider each issue on which the Shareholders of the Company are entitled to
vote. The Secretary shall give each member of the Voting Committee five days'
notice of any meeting of the Voting Committee unless an emergency exists which
requires shorter notice. Such notice shall state all of the matters on which the
Voting Committee shall act at such meeting, and no matters shall be acted on at
such meeting which are not stated in such notice unless each of the members of
the Voting Committee consents to or ratifies such action being taken at such
meeting. At all meetings of the Voting Committee, three or more members of the
Voting Committee, present in person or represented by proxy, shall constitute a
quorum. If a meeting of the Voting Committee cannot be organized because of the
absence of a quorum, the members present may adjourn the meeting to such time
and place as it may determine. The acts of a majority of the members of the
Voting Committee, present in person or by proxy and voting at a meeting having a
quorum, shall be the acts of the Voting Committee. The Peak Designees shall vote
as they are required to vote in accordance with any agreements regarding such
votes among the Peak Shareholders.
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(c) At each meeting of the Voting Committee, the members of the Voting
Committee shall discuss the issues, if any, on which the Shareholders of the
Company are entitled to vote, and shall take a vote on any such issues, and the
outcome of such vote shall be certified by the Secretary.
(d) Each of the HDA Shareholders hereby appoints Xxxxxx Xxx as his agent
(together with any such replacement or substitute acting in such capacity, the
"Shareholders' Agent") to act on his behalf as set forth herein and in the other
Transaction Documents to which such HDA Shareholder or the Shareholders' Agent
is a party. The Shareholders' Agent is hereby authorized by each of the HDA
Shareholders to act hereunder and under such Transaction Documents on his behalf
with the powers and authority provided for herein and therein as the
representative of such HDA Shareholder and his successors. Each of the
Shareholders hereby (i) ratifies the selection of Xxxxxx Xxx to act as the
initial Shareholders' Agent and his authority to act hereunder and under such
Transaction Documents on behalf of such HDA Shareholder and his successors, and
(ii) agrees that any action taken by the Shareholders' Agent pursuant to the
terms of this Agreement or such Transaction Document on his behalf shall be the
act of such HDA Shareholder as fully as if such Shareholder had taken such
action himself. The HDA Shareholders may designate a substitute or replacement
Shareholders' Agent by delivery of a written notice pursuant to Section 9.2
hereof of such designation executed by each HDA Shareholder, who is not then the
Shareholders' Agent.
2.2 VOTING AGREEMENT. Each of the Shareholders shall, and shall
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cause its officers, directors, shareholders, agents, trustees or employees to,
execute all documents and take all actions necessary or desirable, including the
voting of shares beneficially owned by it or with respect to which it has the
right to vote:
(a) to, during such time as the HDA Shareholders collectively hold at
least one-fourth of the Common Stock held (the "Material Holding Period") by
them, after giving effect to the Contemplated Transactions provide for the
election to the Board of two (2) nominees (the "HDA Directors") designated by
the Shareholders' Agent which nominees initially shall be Xxxxxx Xxx and Xxx
Xxxxx, and in the event of any resignation, removal of, or inability to serve as
a director by, any such nominee, or other vacancy in the position of a director
so designated to provide for such vacancy to be filled by a successor nominee
designated by the Shareholders' Agent;
(b) to, if the Voting Committee shall decide that it is in the best
interests of the Company to increase the size of the Board other than in
connection with an acquisition, merger or other strategic transaction in
connection with which one or more persons will be added to the Board, and the
Material Holding Period is continuing, vote the Common Stock owned by it to
provide for the election to the Board of an additional number of nominees
designated by the Shareholders' Agent equal to, when added to the number of
nominees already elected to the
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Board in accordance with Section 2.2(a), 22 percent of the members of the Board
who are representatives of the Shareholders, each of which members of the Board
shall be replaced as set forth above in Section 2.2(a);
(c) to, so long as the Peak Shareholders and the HDA Shareholders own or
control in the aggregate no less than 40 percent of the outstanding and issued
Common Stock, support, ratify, endorse, or oppose all matters relating to the
Company and which are submitted to the Shareholders for a vote as supported,
ratified, endorsed or opposed by the Voting Committee by a vote of its members
in accordance with Section 2.1.
2.3 PROXY. Each Shareholder hereby grants to the Voting Committee a
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proxy to vote the shares of Common Stock held by such Shareholder in any matter
submitted to the Shareholders for a vote to the extent necessary to give effect
to Section 2.2 hereof. Each such proxy is coupled with an interest and shall be
irrevocable except in accordance with the terms hereof.
2.4 AFFILIATE TRANSACTIONS. The Company will not enter into any
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arrangement or contract with any Affiliate unless such arrangement is on terms
that are no less favorable to the Company than could be obtained from third
parties who are not Affiliates.
2.5 TERMINATION OF CERTAIN AGREEMENTS. The Everest Shareholders
---------------------------------
Agreement is hereby terminated and superseded in its entirety by this Agreement
and the parties acknowledge that the Management Agreement has previously been
terminated.
3. RESTRICTIONS ON TRANSFER.
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3.1 RESTRICTIVE LEGEND. Any certificate representing shares of Common
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Stock will bear the following legend:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THAT ACT AS TO SAID SHARES
OF COMMON STOCK OR AN OPINION, IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY AND GIVEN BY COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT
REQUIRED. THE SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER, VOTING AND CERTAIN
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OTHER AGREEMENTS SET FORTH IN A SHAREHOLDERS AGREEMENT AMONG THE
COMPANY, VARIOUS OTHER PARTIES AND THE ORIGINAL HOLDER HEREOF
DATED AS OF NOVEMBER 30, 1997. A COPY OF SUCH AGREEMENT MAY BE
OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF
BUSINESS WITHOUT CHARGE."
3.2 OPINION OF COUNSEL. No Shareholder may Transfer any shares of Common
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Stock (except Transfers pursuant to an effective registration statement under
the Securities Act, pursuant to the laws of descent and distribution or pursuant
to Section 4 or Section 5) without first delivering to the Company an opinion of
counsel (reasonably acceptable in form and substance to the Company) that
neither registration nor qualification under the Securities Act and applicable
state securities laws is required in connection with such Transfer.
3.3 SHAREHOLDER TRANSFER RESTRICTIONS.
---------------------------------
(a) No Shareholder shall Transfer any interest in any shares of Common
Stock, either voluntarily or involuntarily, by operation of law or otherwise,
except Transfers occurring after the fifth anniversary of the date hereof and
the following transfers occurring prior thereto: (i) to any Permitted
Transferee; (ii) Transfers pursuant to an Approved Sale in accordance with
Section 4 below; (iii) Transfers by any HDA Shareholder to any other HDA
Shareholder, Peak Liquidating, Peak Shareholder or the Company in accordance
with Section 5 hereof; (iv) Transfers by Peak Liquidating to any Peak
Shareholder, or any Peak Shareholder to any other Peak Shareholder; (v) any
Transfers by Peak Liquidating or any Peak Shareholder to any Person if each HDA
Shareholder is given the opportunity to participate in such Transfer, pro rata,
based on his and the Peak Shareholder's (or Peak Liquidating's) percentages of
ownership of the issued and outstanding shares of Common Stock (without giving
effect to such Transfer), on the same terms as such Peak Shareholder (or Peak
Liquidating); and (vi) after June 20, 1998, a Transfer by any HDA Shareholder of
Common Stock held by it to any other HDA Shareholder, the Company or any Peak
Shareholder if, after giving effect to such proposed Transfer, such HDA
Shareholder would continue to hold at least seventy-five percent (75%) of the
Common Stock held by him as of the Closing after giving effect to any dilution
thereof as a result of the issuance of shares of Common Stock as consideration
in connection with an Approved Sale (as defined in Section 4.1 hereof);
provided, however, that (x) the restrictions contained in this Agreement will
continue to be applicable to the shares of Common Stock so Transferred (other
than in accordance with clause (ii)), and the Person to whom such shares are
Transferred, by accepting the Transfer of such shares, thereby agrees to be
bound by the terms of this Agreement as fully as if such Person were an original
signatory hereof, and (y) notwithstanding any provision hereof, no Shareholder
shall Transfer any interest in shares of the Common Stock, either voluntarily or
involuntarily, by operation of law or otherwise, to any Person which the Board
reasonably determines, within 10 days after receiving the applicable Transfer
Notice (as
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defined below), is a competitor of the Company or is otherwise a person or
entity whose interests are adverse to the Company.
(b) Each Shareholder (the "Transferring Shareholder") intending to
Transfer any interest in any shares of Common Stock, either voluntarily or
involuntarily, by operation of law or otherwise, shall provide written notice
(the "Transfer Notice") to the Company and to each of the other Shareholders of
the Company no later than 15 days, and no earlier than 30 days, prior to the
consummation of such Transfer, setting forth the following:
(i) the intention of the Transferring Holder to Transfer such
shares and the number of such shares proposed to be
Transferred;
(ii) the name and address of the potential transferee (the
"Potential Transferee") in connection with such Transfer;
and
(iii) in the event of any proposed Transfer in accordance with
Section 3.3(a)(v), the amount of the purchase price to be
paid by the Potential Transferee, the payment terms and
the other terms and conditions of such Transfer, and a
copy of any written offer and all correspondence and other
documents relating to the proposed Transfer.
3.4 TRANSFERS IN VIOLATION OF AGREEMENT. Any transfer or attempted
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transfer of any shares of Common Stock in violation of any provisions of this
Agreement shall be void, and the Company shall not record such transfer on its
books or treat any purported transferee of such shares of Common Stock as the
owner of such shares of Common Stock for any purpose.
4. SALE OF THE COMPANY.
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4.1 APPROVED SALE. If the Voting Committee approves a Sale of the Company
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(the "Approved Sale"), then each Shareholder will consent to and raise no
objection to the Approved Sale, and if the Approved Sale is structured as a sale
of shares of Common Stock, then each Shareholder will agree to sell all of its
shares of Common Stock on the same terms and conditions as provided for pursuant
to the Approved Sale. Each Shareholder agrees to take all actions which are
necessary in connection with the consummation of any Approved Sale and which are
not otherwise inconsistent with the terms hereof and which do not create
additional liability on the part of the HDA Shareholders.
4.2 CONDITION AND COVENANT AS TO CONSIDERATION. The obligations of each
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Shareholder set forth in Section 4.1 above with respect to an Approved Sale are
subject to the satisfaction of the following conditions: (i) upon the
consummation of the Approved Sale, each
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Shareholder will receive the same amount of consideration for its shares of
Common Stock in connection with such Approved Sale, pro rata, based on its
percentage of ownership of the issued and outstanding shares of Common Stock
being sold, and (ii) each Shareholder shall receive the same form of
consideration in connection with the Approved Sale. If any Shareholder is given
an option as to the form of consideration to be received in connection with any
transaction, other than for services to be performed after the consummation of
such transaction on terms that are no less favorable to those that could be
obtained by others in the market generally, each other Shareholder shall be
given the same option.
4.3 EXPENSES. The Company will pay the costs of any sale of shares of
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Common Stock pursuant to an Approved Sale to the extent such costs are incurred
for the benefit of all holders of shares of Common Stock and are not otherwise
paid by the Company or the acquiror. Any other costs incurred by any of the
Shareholders on their own behalf will not be considered costs of a transaction
hereunder.
5. REPURCHASE OPTION. Upon the termination of an HDA Shareholder's (each such
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shareholder is sometimes hereinafter referred to as the "Terminated
Shareholder") employment with Everest for any reason, each share of Common Stock
held by such Terminated Shareholder will be subject to repurchase by the other
HDA Shareholders, Peak Liquidating, the Peak Shareholders and the Company
pursuant to the terms and conditions set forth in this Section 5 (the
"Repurchase Option").
5.1 PURCHASE PRICE. If the Repurchase Option is exercised or if the
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Terminated Shareholder elects for his shares of Common Stock to be purchased
under Section 5.2, the purchase price for each share of such Common Stock will
be the fair market value of such shares, after giving effect to appropriate
minority and lack of liquidity discounts as discussed below (the "Fair Market
Value"), as determined by an independent AIA appraiser who is chosen by the
Person exercising the Repurchase Option, reasonably experienced and reasonably
acceptable to the Terminated Shareholder whose shares are being purchased. If
the parties cannot agree on an appraiser in accordance with the terms hereof,
each party will select a reasonably experienced and recognized appraiser and
those appraisers will in turn select a third. Each of the appraisers
determining the Fair Market Value of the Company shall determine the Fair Market
Value of the Company based on criteria deemed by such appraiser to be relevant
to such determination, including, without limitation, the fair market value of
the Company's assets, including the intangible value of the Company's property,
and the going concern value of the Company's properties, in such appraiser's
professional opinion and shall apply minority and lack of liquidity discounts
(and no others) to such valuation in the aggregate of not less than 20 percent
and not more than 30 percent based on such appraiser's professional opinion of
the appropriate minority and lack of liquidity discounts for such shares. The
average of the two closest appraisals (if more than one), after giving effect to
such minority and lack of liquidity discounts, shall be the amount paid for such
Common Stock. Each of the parties hereto shall
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use its Best Efforts to cause the Fair Market Value to be established in
accordance with this Section 5.1 within thirty (30) days after the appraiser is,
or appraisers are, as the case may be, chosen in accordance with this Section
5.1. The Person exercising the Repurchase Option shall pay the costs of the
appraisal performed by the appraiser chosen by him and reasonably acceptable to
the Terminated Shareholder. The Terminated Shareholder shall pay the costs of
any appraisal performed by an appraiser chosen by him if he unreasonably rejects
the appraiser chosen by the Person exercising the Repurchase Option in
accordance with this Section 5.1. In the event such Person and the Terminated
Shareholder each choose an appraiser in accordance herewith and they choose a
third appraiser, such Person and the Terminated Shareholder shall share the
costs of such appraiser and the appraisal performed thereby.
5.2 REPURCHASE NOTICE. At the election of the Terminated Shareholder as
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set forth below, or if any shares of Common Stock pledged pursuant to the
Repurchase Pledge Agreement (as defined below) are successfully appropriated and
realized upon, the non-selling HDA Shareholders shall be obligated to purchase
at least twenty five percent (25%) of such Terminated Shareholder's shares of
Common Stock then owned by such Shareholder or appropriated and realized upon.
If the Terminated Shareholder desires to sell his common stock, he shall give
written notice of the number of shares he desires to sell to the non-selling HDA
Shareholders within 30 days of the date of termination of his employment. The
non-selling HDA Shareholders may elect to purchase all or a greater portion of
such shares. Such HDA Shareholders shall deliver written notice (the
"Repurchase Notice") to such Terminated Shareholder within 30 days after the
purchase price for the shares has been determined in accordance with Section
5.1. The Repurchase Notice shall set forth the number of shares of Common Stock
of such Terminated Shareholder to be acquired from such Person, the aggregate
consideration to be paid for such securities and the time and place for the
closing of the transaction.
5.3 PEAK LIQUIDATING AND SHAREHOLDER OPTION. If for any reason, such non-
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selling HDA Shareholders do not elect to purchase all of the shares of Common
Stock that are subject to such Repurchase Option pursuant to the Repurchase
Option, Peak Liquidating and the Peak Shareholders shall be entitled to exercise
the Repurchase Option for the shares of Common Stock such HDA Shareholders have
not elected to purchase (the "Available Securities"). As soon as practicable
after such HDA Shareholders have determined that there will be Available
Securities, such HDA Shareholders shall give written notice (the "Option
Notice") to Peak Liquidating and the Peak Shareholders setting forth the number
of Available Securities and the purchase price for each of such Available
Securities. Peak Liquidating and any or all of the Peak Shareholders may elect
to purchase all or a portion of such Available Securities by giving written
notice of such election to such HDA Shareholders within 30 days after the Option
Notice has been given by such HDA Shareholders to Peak Liquidating and the Peak
Shareholders. If Peak Liquidating and the Peak Shareholders elect to purchase
in the aggregate more than the Available Securities, then, unless they agree
otherwise among the electing parties, the Available Shares shall be
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allocated first to Peak Liquidating and then to the electing Peak Shareholders
pro rata according to the amounts they elected to purchase. As soon as
practicable, and in any event within 10 days after the expiration of such 30-day
period, such HDA Shareholders shall notify such Terminated Shareholder of the
number of shares of Common Stock being purchased from such person by Peak
Liquidating and the Peak Shareholders (the "Supplemental Repurchase Notice").
At the time such HDA Shareholders deliver the Supplemental Repurchase Notice to
the Terminated Shareholder, such HDA Shareholders shall also deliver written
notice to Peak Liquidating and the Peak Shareholders setting forth the number of
shares of Common Stock which Peak Liquidating and the Peak Shareholders are
entitled to purchase, the aggregate purchase price and the time and place of the
closing of the transaction.
5.4 COMPANY'S OPTION. If for any reason Peak Liquidating and the Peak
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Shareholders do not elect to purchase all of the Available Securities pursuant
to the Repurchase Option, the Company shall be entitled to exercise the
Repurchase Option for the shares of Available Securities which the parties have
not elected to purchase (the "Remaining Available Securities"). As soon as
practicable after the HDA Shareholders have determined that there will be
Remaining Available Securities, the HDA Shareholders shall give written notice
(the "Company Option Notice") to the Company setting forth the number of
Remaining Available Securities and the purchase price for each of such Remaining
Available Securities. The Company may elect to purchase all or a portion of
such Remaining Available Securities by giving written notice of such election to
the HDA Shareholders within 30 days after the Company Option Notice has been
given by the HDA Shareholders to the Company. As soon as practicable, and in
any event within 10 days after the expiration of such 30-day period, such HDA
Shareholders shall notify the Terminated Shareholder of the number of shares of
Common Stock being purchased from such person by the Company (the "Company
Repurchase Notice"). At the time such HDA Shareholders deliver the Company
Repurchase Notice to the Terminated Shareholder, such HDA Shareholders shall
also deliver written notice to the Company setting forth the number of shares of
Common Stock which the Company is entitled to purchase, the aggregate purchase
price and the time and place of the closing of the transaction. If, after the
exercise by the HDA Shareholders, Peak Liquidating, the Peak Shareholders and
the Company of the Repurchase Option, all of the Terminated Shareholder's shares
of Common Stock would not be purchased in connection with the exercise of the
Repurchase Option, such Terminated Shareholder shall have no obligation to sell
any of its shares of Common Stock pursuant thereto.
5.5 CLOSING. The closing of the purchase of the shares of Common Stock
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pursuant to the Repurchase Option (the "Closing") shall take place on the date
designated by such Shareholders in the Repurchase Notice, the Supplemental
Repurchase Notice or the Company Repurchase Notice, which date shall not be
later than the 30th day after delivery of the latest of such notices to be
delivered. The HDA Shareholders (other than the Terminated Shareholder), Peak
Liquidating and the Peak Shareholders or the Company will pay for the shares at
a Fair Market Value multiplied by the number of shares of Common Stock to be
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purchased pursuant to the Repurchase Option by delivery at the Closing of (i)
cash in an amount equal to twenty percent (20%) of the aggregate purchase price
for such shares as determined in accordance with Section 5.1 and Section 5.6
subject to, in the case of any purchase by the Company, Section 9.16 hereof,
(ii) a promissory note substantially in the form of Exhibit B hereto which shall
be due and payable, subject to, in the case of any purchase by the Company,
Section 9.16 hereof, no later than the second anniversary of the execution and
delivery thereof, and (iii) a pledge agreement substantially in the form of
Exhibit C hereto (the "Repurchase Pledge Agreement"); provided, however, that in
the event the purchase price for such shares does not exceed, in the aggregate,
$250,000, the purchaser shall pay such amount in full as the purchase price and
shall not deliver the documents described in clauses (ii) and (iii) above. The
purchaser of the shares of Common Stock will be entitled to receive customary
representations and warranties from the seller of such shares as to title,
authority and capacity to sell.
5.6 PURCHASE PRICE ADJUSTMENT. In the event (i) a Terminated
-------------------------
Shareholder's employment with the Company is terminated by the Company without
Cause (as defined in such Terminated Shareholder's employment agreement with
Everest) or by the resignation of the Terminated Shareholder for Good Reason (as
defined in such employment agreement), (ii) the Repurchase Option for any of the
Terminated Shareholder's Common Stock is exercised by any Person, and (iii)
within six months of the termination of such employment agreement, an Approved
Sale or a Transfer in accordance with Section 3.3(a)(v) hereof is consummated,
or a Qualified Public Offering occurs, at a price per share (the "Transaction
Price") of Common Stock payable to such Person which is higher than the purchase
price at which the Repurchase Option was exercised by such Person (the
"Repurchase Price"), such Person shall pay to such Terminated Shareholder,
within 30 days after the consummation of such transaction or of such an
occurrence, an amount equal to (1)(a) the Transaction Price, minus (b) the Fair
Market Value of the shares, multiplied by (2) the number of shares purchased by
such Person pursuant to the exercise of the Repurchase Option.
6. TERMINATION. The provisions of this Agreement, other than Section 8, shall
-----------
terminate on the earlier to occur of:
(a) an Approved Sale;
(b) a dissolution of the Company; or
(c) notwithstanding any provision of Sections 2.1 and 2.2, the approval of
the Board and the affirmative vote of the Shareholders holding 90% of the
outstanding shares of Common Stock subject to this Agreement.
Upon the occurrence of a Qualified Public Offering, the provisions of this
Agreement, other than the provisions of Sections 2 and 8, shall cease to be
effective. At such time as the
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aggregate percentage of the shares of Common Stock held by the HDA Shareholders,
Peak Liquidating and the Peak Shareholders does not exceed forty-one percent
(41%) of the issued and outstanding shares of Common Stock at such time, Section
2 of this Agreement shall cease to be effective.
7. NON-DILUTION RIGHTS. Except for the issuance or sale, with the approval of
-------------------
the Board and subject to Section 2.5 hereof, of any shares of Common Stock (or
any other capital stock of the Company) or any securities containing options or
other rights, as incentive-based compensation, to acquire up to, in the
aggregate, ten percent (10%) of the shares of Common Stock issued and
outstanding from time to time prior to the tenth anniversary of the date hereof
to Peak Shareholders who are also acting in a management or officer role with
the Company, the Company shall not issue or sell to Peak Liquidating, or any
Peak Shareholders any shares of Common Stock (or any other capital stock of the
Company) or any securities containing options or other rights to acquire Common
Stock, unless each of the HDA Shareholders shall be offered the opportunity pro
rata, based on his and Peak Liquidating or the Peak Shareholder's percentage of
ownership of the issued and outstanding shares of the Common Stock without
giving effect to such issuance or sale, to be issued or sold such securities or
options on the same terms and conditions offered to the Peak Shareholders.
8. HOLDBACK AND REGISTRATION RIGHTS.
--------------------------------
(a) Each Shareholder agrees not to effect any public sale or distribution
of Common Stock during the seven (7) days prior to, and during the ninety (90)
days (or in the case of the Company's initial public offering, 180 days)
following, the effective date of any underwritten offering of Common Stock
registered with the Securities and Exchange Commission, except as part of such
underwritten registration, unless the underwriter managing the registered public
offering otherwise agrees. This Section 8 shall continue in force until the
second anniversary of the Company's initial public offering which is a Qualified
Public Offering.
(b) In the event the Company determines to engage in a Qualified Public
Offering, the HDA Shareholders shall have the right to request the Company to
register their shares of Common Stock on the appropriate forms under the
Securities Act, at the Company's sole expense on the same basis that Peak
Liquidating and the Peak Shareholders or their successors or assigns are
entitled to register their shares and pro rata with Peak Liquidating and such
Peak Shareholders and their successors or assigns.
9. MISCELLANEOUS.
-------------
9.1 NO INCONSISTENT AGREEMENTS. None of the parties hereto will hereafter
--------------------------
enter into any agreement which is inconsistent with the rights granted to the
parties in this Agreement.
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9.2 NOTICES, CONSENTS, ETC. Any notices, consents or other communication
-----------------------
required to be sent or given hereunder by any of the parties shall in every case
be in writing and shall be deemed properly served if (a) delivered personally,
(b) sent by registered or certified mail, in all such cases with first class
postage prepaid, return receipt requested, (c) delivered by a recognized
overnight courier service, or (d) sent by facsimile transmission to the parties
at the addresses as set forth below or at such other addresses as may be
furnished in writing.
(a) If to the Company:
Everest Healthcare II, Inc.
000 X. Xxxxxxxx
Xxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Fax No.: 708/000-0000
with a copy to:
Xxxxxx Xxxxxx & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Xxxx Xxxx, Esq.
Fax No.: 312/000-0000
(b) If to Peak Liquidating or any Peak Shareholder:
c/o Xxxxx X. Xxxxx
000 X. Xxxxxxxx
Xxx Xxxx, Xxxxxxxx 00000
Fax No.: 708/000-0000
with a copy to:
Xxxxxx Xxxxxx & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Xxxx Xxxx, Esq.
Fax No.: 312/000-0000
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(c) If to any HDA Shareholder:
c/o Xxxxxx Xxx
Home Dialysis of America, Inc.
0000 Xxxx Xx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Fax No.: 520/000-0000
with a copy to:
Xxxx & Xxxxxxx
000 X. Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Fax No.: 312/000-0000
Date of service of such notice shall be (w) the date such notice is personally
delivered, (x) three days after the date of mailing if sent by certified or
registered mail, (y) one day after date of delivery to the overnight courier if
sent by overnight courier or (z) the next succeeding business day after
transmission by facsimile.
9.4 SEVERABILITY. The unenforceability or invalidity of any provision of
------------
this Agreement shall not affect the enforceability or validity of any other
provision.
9.5 AMENDMENT AND WAIVER. This Agreement may not be amended except by a
--------------------
written Agreement executed by each of the parties hereto. Neither the failure
nor any delay by any party hereto in exercising any right, power or privilege
under the Agreement or the documents referred to in this Agreement will operate
as a waiver of such right, power or privilege, and no single or partial exercise
of any such right, power or privilege will preclude any other or further
exercise of such right, power or privilege or the exercise of any other right,
power or privilege.
9.6 DOCUMENTS. Each party will execute all documents and take such other
---------
actions as any other party may reasonably request in order to consummate the
transactions provided for herein and to accomplish the purposes of this
Agreement.
9.7 COUNTERPARTS. This Agreement may be executed simultaneously in two or
------------
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the parties hereto and
delivered to the other.
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9.8 CONSTRUCTION. This Agreement shall be construed and enforced in
------------
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the laws
of the State of Illinois, without giving effect to provisions thereof regarding
conflict of laws.
9.9 HEADINGS. The subject headings of Articles and Sections of this
--------
Agreement are included for purposes of convenience only and shall not affect the
construction or interpretation of any of its provisions.
9.10 ASSIGNMENT. This Agreement will be binding upon and inure to the
----------
benefit of the parties hereto and their respective successors and transferees of
shares of Common Stock (who will succeed only to the rights and obligations of
the transferor and only with respect to shares of Common Stock transferred in
accordance with the terms hereof) but will not be assignable or delegable by any
party without the prior written consent of the other parties.
9.11 ENTIRE AGREEMENT. This Agreement, the recitals and all the exhibits
----------------
attached to this Agreement (all of which shall be deemed incorporated in the
Agreement and made a part hereof) set forth the entire understanding of the
parties with respect to the subject matter hereof, and shall not be modified or
affected by any offer, proposal, statement or representation, oral or written,
made by or for any party in connection with the negotiation of the terms hereof,
and may be modified only by instruments signed by all of the parties hereto.
9.12 THIRD PARTIES. Nothing herein expressed or implied is intended or
-------------
shall be construed to confer upon or give to any person or entity, other than
the parties to this Agreement and their respective permitted successors and
assigns, any rights or remedies under or by reason of this Agreement.
9.13 NO STRICT CONSTRUCTION. The language used in this Agreement will be
----------------------
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party
hereto.
9.14 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. EACH OF THE PARTIES
----------------------------------------------
HERETO HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED
WITHIN THE COUNTY OF XXXX, STATE OF ILLINOIS AND IRREVOCABLY AGREE THAT ALL
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE
LITIGATED IN SUCH COURTS. EACH OF THE PARTIES HERETO ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE OF FORUM NON
CONVENIENS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH
-16-
THIS AGREEMENT. SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH
COURT SHALL BE MAILED BY REGISTERED MAIL TO EACH PARTY HERETO A PARTY TO SUCH
PROCEEDING EXCEPT THAT UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE
TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. EACH
SHAREHOLDER HEREBY AGREES THAT SERVICE UPON HIM BY CERTIFIED MAIL SHALL
CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY
OTHER PARTY HERETO TO SERVE PROCESS ON ANY PARTY HERETO IN ANY OTHER MANNER
PERMITTED BY LAW.
9.15 REMEDIES. Each of the parties to this Agreement will be entitled to
--------
enforce its rights under this Agreement specifically, to recover damage by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and acknowledge
that money damages will not be an adequate remedy for any breach of the
provisions of this Agreement and that any party in its sole discretion apply to
any court of law or equity of competent jurisdiction for specific performance or
injunctive relief (without the necessity of posting a bond) in order to enforce
or prevent any violation of the provisions of this Agreement.
9.16 RESTRICTIONS AND EXCEPTIONS TO CERTAIN OBLIGATIONS. Except as
--------------------------------------------------
otherwise set forth herein, the Company shall not have any obligation to
purchase any Common Stock or make any installment payment when due pursuant to
this Agreement if:
(a) such purchase or payment would constitute a violation of applicable
law or any covenant in any loan document or similar agreement with banks or
insurance companies by which it is bound; or
(b) such purchase or installment payment would require it to pay an
aggregate amount hereunder in any given fiscal year equal to or greater than
thirty-three percent (33%) of its income after income taxes.
In the event either of such restrictions exists, the Company shall purchase the
amount of Common Stock or make the applicable installment payment as it is then
able to purchase or make pursuant to the terms hereof that would not be so
restricted. The remainder of such amounts shall be purchased or paid, as
applicable, at such time as such conditions no longer exist. Notwithstanding
any provision hereof, all such payments shall be made no later than the tenth
anniversary of any purchase of such Common Stock.
-17-
IN WITNESS WHEREOF, the parties hereto have caused this Shareholders
Agreement to be signed as of the date first written above.
THE COMPANY:
EVEREST HEALTHCARE II, INC.
By: /s/ XXXXX X. XXXXX
-----------------------------------------
Xxxxx X. Xxxxx, Chief Executive Officer
PEAK SHAREHOLDERS:
/s/ XXXXXX XXXXXX, M.D.
---------------------------------------------
Xxxxxx Xxxxxx, M.D.
/s/ XXXX XXXXXX, M.D.
---------------------------------------------
Xxxx Xxxxxx, M.D.
/s/ XXXXXXX CARBON, M.D.
---------------------------------------------
Xxxxxxx Carbon, M.D.
/s/ XXXXXXX XXXXXX, M.D.
---------------------------------------------
Xxxxxxx Xxxxxx, M.D.
/s/ XXXXXXXX XXXXX, M.D.
---------------------------------------------
Xxxxxxxx Xxxxx, M.D.
/s/ XXXXXX XXXXX, M.D.
---------------------------------------------
Xxxxxx Xxxxx, M.D.
/s/ XXXXX X. XXXXX
---------------------------------------------
Xxxxx X. Xxxxx
-00-
XXX XXXXXXXXXXXX:
/s/ XXXXXX XXX
---------------------------------------------
Xxxxxx Xxx
/s/ XXXXXX XXXXX
---------------------------------------------
Xxxxxx Xxxxx
/s/ XXXX XXXXXXXXX
---------------------------------------------
Xxxx Xxxxxxxxx
/s/ XXXXXXX XXXXX
---------------------------------------------
Xxxxxxx Xxxxx
HDA SHAREHOLDERS' AGENT:
/s/ XXXXXX XXX
---------------------------------------------
Xxxxxx Xxx
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