EXHIBIT 5
OPTION AGREEMENT
OPTION AGREEMENT, dated December 17, 1997, between Lexington
Healthcare Group, Inc., a Delaware corporation (the "Corporation") and Xxxx
Xxxxxxxx (the "Optionee").
WHEREAS, the Corporation has adopted a 1997 Stock Option Plan
(the "Option Plan").
WHEREAS, the Corporation desires to grant to the Optionee,
pursuant to the Option Plan, the right and option to purchase shares (the
"Option Shares") of Common Stock, $.0l par value per share (the "Common
Stock"), of the Corporation, on the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the receipt of $1.00 and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
SECTION 1. Option to Purchase Common Stock.
a. Subject to Section 12 hereof, the Corporation hereby
grants to the Optionee, pursuant to the Option Plan, an option (the
"Option") to purchase from the Corporation Option Shares, at a purchase
price of $2.625 per Option Share (the "Option Price"). The Optionee's
right and option to purchase the Option Shares shall vest annually
commencing December 17, 1998 as follows: (i) 20,000 Option Shares vest on
December 17, 1998; (ii) 20,000 Option Shares vest on December 17, 1999; and
(iii) 20,000 Option Shares vest on December 17, 2000 (each an
"Installment") at the Option Price, so long as the Optionee is
employed by the Corporation. Said right shall be cumulative. In the event
that the Optionee's employment with the Corporation terminates prior to
December 17 of any year, the Optionee shall not have the right or option to
purchase any part of an Installment which would have otherwise vested on
such December 17. With respect to the Option, the "Option Period" shall
commence on the date hereof and terminate on December 16, 2003.
b. The Option may be exercised by the Optionee by delivery
to the Corporation, at any time commencing December 17, 1998, of a written
notice (the "Option Notice"), which Option Notice shall state the
Optionee's intention to exercise the Option, the date on which the Optionee
proposes to purchase the Option Shares (the "Closing Date") and the number
of Option Shares to be purchased on the Closing Date, which Closing Date
shall be no later than 30 days nor earlier than 10 days following the date
of the Option Notice. Upon receipt by the Corporation of an Option Notice
from the Optionee, the Optionee shall be obligated to purchase that number
of Option Shares to be purchased on the Closing Date set forth in the
Option Notice.
c. The purchase and sale of Option Shares acquired
pursuant to the terms of this Option Agreement shall be made on the Closing
Date at the offices of the Corporation. Delivery of the stock certificate
or other instrument registered in the name of the Optionee, evidencing the
Option Shares being purchased on the Closing Date, shall be made by the
Corporation to the Optionee on the Closing Date against the delivery to the
Corporation of a certified or bank check in the full amount of the
aggregate purchase price therefor.
SECTION 2. Representations and Warranties of The Holder. The
Optionee hereby represents and warrants to the Corporation that in the event the
Optionee acquires any Option Shares, such Option Shares will be acquired for his
own account, for investment and not with a view to the distribution thereof. The
Optionee understands that except as set forth in Section 6 hereof, the Option
Shares will not be registered under the Securities Act of 1933, as amended (the
"Securities Act"), and that they must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act or the transaction is
exempt from registration. The certificate or certificates representing any
Option Shares shall bear the following restrictive legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933; OR (ii) TO THE EXTENT APPLICABLE,
RULE 144 UNDER SUCH ACT (OR SIMILAR RULE UNDER THE SECURITIES
ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
SATISFACTORY TO COUNSEL FOR THE ISSUER, THAN AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT IS AVAILABLE."
SECTION 3. Reorganization; Mergers; Sales; Etc.
a. If, at any time during the Option Period, there shall
be any capital reorganization, reclassification of Common Stock (other than
a change in par value or from par value to no par value or from no par
value to par value or as a result of a stock dividend or subdivision,
split-up or combination of shares), or the consolidation or merger of the
Corporation with or into another corporation that does not result in a
"Change of Control" (as such term is hereinafter defined), then the
unexercised and fully vested portion of this Option shall, after such
reorganization, reclassification, consolidation or merger, be exercisable
for the kind and number of shares of stock or other securities or property
of the Corporation or of the corporation resulting from such consolidation
or surviving such merger to which the Optionee would have been entitled if
the Optionee had held shares of Common Stock issuable upon the exercise
hereof immediately prior to such reorganization, reclassification,
consolidation, merger or sale.
b. If at any time during the Option Period, there shall be
any Change in Control, then (i) all options under this Option shall become
vested, accelerate and become immediately exercisable as of the date
immediately preceding the effective date of the Change of Control, and (ii)
the unexercised and fully vested Option shall, after such Change in
Control, be exercisable for the kind and number of shares of stock of the
Corporation or the Corporation resulting from such consolidation of
surviving such merger or to which such properties and assets shall have
been sold to which the Optionee would have been entitled if the Optionee
had held all of the Option Shares immediately prior to such Change of
Control. A change of control shall be deemed to have occurred when:
(i) A person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, becomes, or obtains the
right to become, the beneficial owner of the Corporation's securities
having 30% or more of the combined voting power of then outstanding
securities of the Corporation that may be cast for the election of
directors of the Corporation;
(ii) At any time, a majority of the Board-nominated
slate of candidates for the Board is not elected;
(iii) The Corporation consummates a merger in which it
is not the surviving entity;
(iv) Substantially all of the Corporation's assets
are sold; or
(v) The Corporation's Stockholders approve the
dissolution or liquidation of Employer.
c. The provisions of this Section 3 shall similarly apply
to successive reorganizations, reclassifications, consolidations, mergers
and sales.
SECTION 4. Adjustment of Option Shares and Option Price.
a. The number of Option Shares subject to this Option
during the Option Period shall be cumulative as to all prior dates of
calculation and shall be adjusted for any stock dividend, subdivision,
split-up or combination of Common Stock.
b. The Option Price shall be subject to adjustment from
time to time as follows:
If, at any time during the Option Period, the number of shares of
Common Stock outstanding is altered by a stock dividend payable in shares
of Common Stock or by a subdivision or split-up or combination of shares of
Common Stock, then, immediately following the record date fixed for the
determination of holders of shares of Common Stock, entitled to receive
such subdivision or split-up or combination, the Option Price shall be
appropriately increased or decreased and the number of shares of Common
Stock issuable upon the exercise hereof shall be increased or decreased,
pursuant to the formula set forth in Section 4.c.
c. Upon each adjustment of the Option Price pursuant to
the provisions of this Section 4, the number of shares of Common Stock
issuable upon the exercise hereof shall be adjusted to the nearest full
share of Common Stock by multiplying a number equal to the Option Price in
effect immediately prior to such adjustment by the number of shares of
Common Stock issuable immediately prior to such adjustment and dividing the
product so obtained by the adjusted Option Price.
SECTION 5. Termination of the Options.
a. Termination of Options in General. Subject to
subsections (b)-(d) of this Section, the Option granted hereby shall
terminate and the Option shall no longer be exercisable after the earlier
of December 16, 2003 or three months after the date of termination of
employment, except in the case of retirement, death or disability.
b. Option Rights Upon Retirement. If the Optionee retires
from the employment of the Corporation or any affiliate or subsidiary in
accordance with the Corporation's retirement policy of the Corporation or
any affiliate or subsidiary and prior to his complete exercise of the
Option, the Board of Directors or the Stock Option Committee of the
Corporation, in its discretion, may allow the Option to be fully exercised,
at any time within one year after the date of such termination, to the
extent that the Optionee was entitled to exercise the Option at the date of
his retirement.
c. Option Rights Upon Disability. If an Optionee becomes
disabled while employed by the Corporation or any affiliate or subsidiary
and prior to his complete exercise of the Option, the Board of Directors
or the Stock Option Committee of the Corporation, in its discretion,
may allow the Option to be fully exercised, at any time within one year
after the date of such termination, to the extent that the Optionee was
entitled to exercise the Option at the date of his disability.
d. Death of the Optionee. In the event that an Optionee
shall die while he is an employee of the Corporation (or within three (3)
months after the termination of such employment) and prior to his complete
exercise of the Option, the Option may be exercised in whole or in part
only: (i) by the Optionee's estate or on behalf of such person or persons
to whom the Optionee's rights pass under his Will or by the laws of descent
and distribution, (ii) to the extent that the Optionee was entitled to
exercise the Option at the date of his death, and (iii) prior to the
expiration of the term of the Option, or within one year after the date of
death, whichever is earlier.
SECTION 6. Transfer of Option; Successors And Assigns.
This Agreement (including the Option) and all rights hereunder
shall not be transferable at any time without the prior written consent of
the Corporation. This Agreement and all the rights hereunder shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors, approved assigns and approved transferees.
SECTION 7. Employment of Optionee. Neither the adoption of
the 1997 Plan nor the granting of any Option shall confer upon the Optionee
any right to continued employment, nor shall it interfere in any way with
the right of the Company to terminate the employment of Optionee at any
time, with or without cause.
SECTION 8. Notices. All notices or other communications
which are required or permitted hereunder shall be in writing and
sufficient if delivered personally or sent by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
If the Corporation, to:
Lexington Healthcare Group, Inc.
00 Xxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, President
With a copy to:
Xxxxxx Xxxxxx, Esq.
Gersten, Savage, Xxxxxxxxx & Xxxxxxxxxx, LLP
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
If to the Optionee:
to the address written below the Optionee's signature below;
or to such other address as the party to whom notice is to be given may
have furnished to the other party in writing in accordance herewith. If
mailed as aforesaid, any such communication shall be deemed to have been
given on the third business day following the day on which the piece of
mail containing such communication is posted.
SECTION 9. Governing Law. This Agreement shall be governed
by, and construed in accordance with the laws of the State of Connecticut.
SECTION 10. Entire Agreement. This Agreement contains the
entire agreement between the parties hereto with respect to the
transactions contemplated herein and supersedes all previously written or
oral negotiations, commitments, representations and agreement.
SECTION 11. Amendments and Modifications. This Agreement, or
any provision hereof, may not be amended, changed or modified without the
prior written consent of each of the parties hereto.
SECTION 12. Termination. In addition to the termination
provisions set forth in Section 1 hereof, the Option shall terminate and
the Option shall no longer be exercisable after December 16, 2003.
[Signatures on following page]
IN WITNESS WHEREOF, the parties hereto have caused this Option
Agreement to be executed and delivered as of the date first above written.
LEXINGTON HEALTHCARE GROUP, INC.
By: /s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
President
AGREED TO AND ACCEPTED BY:
Xxxx Xxxxxxxx ###-##-####
Optionee Name and Social Security Number
0000 Xxxxxx Xxxx Xx.
Optionee Address
Xxxxxxxxx, XX 00000
